Krakatau delays blast furnace start amid corruption claims
Posted on 30 September 2021
Indonesian state-owned Krakatau Steel expects to operate its new blast furnace in the third quarter of 2022, Kallanish understands from local media reports. The long-delayed start-up demonstrates signs of corruption, according to state-owned enterprises minister Erick Thohir.
The company has long planned to operate a 1,832 cubic metre, 1.2 million tonne/year blast furnace, and has even declared official openings in the past. However, the plant has never been fully operational. The project had already been delayed for several years when current president director Silmy Karim took his position, when he was charged by the government with reforming the struggling company.
Since then, the company has been focussed on completing projects, restructuring debt and restructuring the company to become more profitable. Some non-core subsidiaries have been sold off, and the company has a new trading arm which hopes to bring in increased revenue from exports.
Krakatau has now commissioned a 1.5m t/y hot strip mill, which had also been long-delayed. Because it is reliant on purchased slab, however, the mill is reportedly struggling to turn a profit.
Krakatau has reported accumulated debt of some IDR 31 trillion ($2.17 billion), including the $850 million official cost of the blast furnace project. A debt restructuring in January 2020 helped to reduce repayment costs, but the company is still struggling to operate its full equipment at high capacity utilisation.