Krakatau Steel Lands $250 Million Loan for New Plant in Banten

Ivan Dasa Saputra

Three state banks have agreed to lend $250 million to government-owned Krakatau Steel to finance the construction of a plant in Cilegon, Banten, and continue to fire the growing manufacturing sector.

The steel maker said in a statement on Tuesday that the three lenders involved in the agreement were Bank Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia. It said Bank Mandiri would provide $100 million, BNI $100 million and BRI $50 million.

The agreement was signed by Krakatau Steel’s president director, Fazwar Bujang; Bank Mandiri’s director for corporate banking, Fransisca Nelwan Mok; BNI’s director of business banking, Krishna Suparto; and Asmawi Syam, a director at BRI.

The syndicated loans, the statement said, mature in six years.

Nelwan of Bank Mandiri said the loans were expected to boost Krakatau’s production and help it meet domestic demand for steel, especially from the manufacturing and infrastructure sectors.

“We believe a stronger manufacturing sector, as well as better infrastructure, is a prerequisite for Indonesia to boost investment,” he said.

Krakatau is building a Rp 5.92 trillion ($640 million) plant with a blast furnace that will have a capacity of 1.2 million tons per year. Construction of the plant is expected to begin in the third quarter of this year and be completed in the first quarter of next year.

The plant will also have support facilities such as a sintering system, a coke oven and handling systems for iron ore materials and hot metal.