Jakarta, InfoPublik - National steel industry has the opportunity to enlarge the capacity of production and slashes the imports thanks to the establishment of steel industry estate in Cilegon. The estate is projected to produce 10 million tons of steel in 2025.

"The steel industry is one of our development priorities. This sector is the mother of all industry because its products are the raw material for other industries," said Industry Ministry’s director general for metal, machinery, transportation equipment, and electronic industries I Gusti Putu Suryawirawan in Jakarta, Tuesday (5/23).

“The optimism is based on the national economic growth that continues to improve.

“Central Bureau of Statistics recorded that Indonesia's economic growth in the first quarter of 2017 amounted to 5.01 percent. It is higher than the first quarter of 2016 that stood at about 4.92 percent.”

This achievement was also higher than the growth in the fourth quarter of 2016 at 4.94 percent. "This growth is the result of an appropriate economic policy response from the government, low inflation, and controlled interest rates," Putu said.

The government estimated economic growth in 2017 will be higher than 2016—in the range of 5.2 to 5.4 percent. Industry Ministry saw the economic growth as a good opportunity for the domestic steel industry.

"Economic growth will be maintained if the export-import system is good," he said.

PT Krakatau Steel Tbk. (KS) president director Mas Wigrantoro Roes Setyadi said that PT KS and Korean steel company Posco had worked together to develop steel estate to support the production of up to 10 million tons of steel in Cilegon, Banten. "Krakatau Steel industrial area in Cilegon is currently occupied by integrated steel companies, namely PT KS and PT Krakatau Posco [a joint venture of PT KS and Posco]," he said.

“The industrial estate in Cilegon has good supporting infrastructures such as power station, industrial water, and deep water bulk port in Indonesia.”

Currently, the combined production capacity of PT KS and PT Krakatau Posco has reached 4.5 million tons and will be increased to 1.5 million tons at the end of 2019 through the operation of HSM#2 factory. Thus, the total production will reach 6 million tons. It will only need to add 4 million tons to reach the 10 million tons.

Mas Wig said the Cilegon steel estate would produce rolled steel for construction, steel sheet for household appliances, shipyard, automobile, and high quality steel sheets. "We hope it will also bring significant progress for the independent steel production effort," he said.

Domestic steel needs in 2016 increased sharply to 12.67 million tons after experiencing a decline in 2015 that only reached 11.37 million tons. "The establishment of 10 million tons of steel estate by 2025 will replace 70 to 80 percent of imported steel," Mas Wig concluded.