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The government hopes to see the domestic steel industry grow
7 percent this year and meet more local demand, an Industry Ministry
official said over the weekend.
According to data from the Central Statistics Agency (BPS), the steel
industry grew by 4.73 percent in 2006 after contracting 3.7 percent the
year prior.
Anshari Bukhari, the Industry Ministry's director general for metals,
machines and textiles, said over the weekend the total production of
concrete steel, steel wire, Hot Rolled Coil (HRC), Cold Rolled Coil,
plates, pipes and steel waffle reached 7.02 million tons in 2006, or
about 3.64 percent higher than in 2005.
"HRC and plates contributed the most to the industry's growth, with
combined production volume increasing by 18.35 percent to total
production of 2.4 million tons last year," he said.
This increase, Anshari said, came as a surprise because HRC and plates
had negative production growth of 2.56 percent in 2005. That year,
total production of HRC and plates reached just 2.03 million tons, with
the HRC production volume falling 7.17 percent from 2004.
According to a report from the Industry Ministry, Indonesia's exports
of metal products reached US$7.4 billion in 2006, while the country
imported about $5.4 billion worth of metal products. Meanwhile,
machinery exports reached $1.8 billion and imports $4.7 billion.
Anshari said the focus of the domestic steel industry this year would
be meeting more local demand and reducing the dependency on imported
steel products.
Last year, Indonesia imported about 2.1 million tons of steel products,
about a 10.52 percent increase from 2005.
"The imports were dominated by steel products of a specific quality or
special steel that could not be produced here. These products were
mostly for the automotive and electronics industries," Anshari said.
He said Indonesia's steel industry was only able to produce mainly
ordinary steel, and that the production capacity of factories was often
hit by shortages of gas and electricity.
In order to increase the industry's capacity, particularly to produce
specialized steel products, the ministry plans to conduct a national
study on iron ore development.
For this year's study, the ministry has allocated Rp 1.1 billion (about
$120,000).
Also to help reduce the dependency on imports, state-owned steel
producer PT Krakatau Steel plans to build an iron ore processing plant
in South Kalimantan that will be able to produce four million tons of
raw steel per year. Construction cost for the plant is expected to
reach about $50 million.
Construction is scheduled to begin in June, with a completion target of
2010.
Earlier, Industry Minister Fahmi Idris said the raw steel produced by
the factory would be used by other Krakatau Steel factories and
developed into other forms of steel, including specialized products for
the domestic automotive and electronics industries.
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