Krakatau Steel

Origins of steel production in Indonesia

Long before the idea of a national steel industry emerged, the foundations of iron-ore processing had been laid in 1861, when the colonial government of the Dutch East Indies built a furnace in Lampung. The blast furnace smelted locally mined iron ore, using coal as fuel. Although small in scale, it was capable of producing crude steel for parts used in sugar factories, rubber factories, and agricultural equipment. The facility later closed due to poor management.

Under the Japanese occupation, a modern furnace was built in South Kalimantan by the Japanese. However, the turbulence of the Second World War and the subsequent Indonesian National Revolution (1945–49) halted these early efforts.

Birth of a national steel industry

It was not until 1956 that serious attention was once again given to the idea of establishing a national steel industry. The Minister of Industry and Mining, Chaerul Saleh, together with Djuanda from the State Planning Bureau (now the Ministry of National Development Planning), began drafting a blueprint for this national initiative. As Indonesia entered a phase of active development, the need for a domestic iron ore processing industry became increasingly apparent.

The State Planning Bureau partnered with a West German consulting agency, WEDEXRO (Westdeutschen Ingenieurbüro Dr. Rohland GmbH), owned by Walter Rohland, to pioneer what became known as the “Trikora Steel Project”.

After the feasibility study was completed, Cilegon was chosen as a place for processing and production of iron ore processed products because it has advantages such as large land that does not convert agricultural land, there are abundant water sources, affordable access from various islands to bring scrap metal through the port of Merak. The signing of development contract with a Soviet all-union foreign trade organization (the company claimed that the organization's name was "Tjazpromexport", or "All Union Export-Import Corporation") on June 7, 1960 continued with the groundbreaking ceremony on May 20, 1962. Once again, the construction was halted again due to political turmoils resulted by the 30 September Movement. After a vacuum of five years, the Trikora Steel Project was continued through Government Regulation of the Republic of Indonesia Number 35, August 31, 1970 with the establishment of PT Krakatau Steel (Persero). The establishment of Krakatau Steel was validated by civil law notarial act of Tan Thong Kie in Jakarta Number 34 of October 23, 1971.

Development and expansion

Since then, Krakatau Steel has worked to accelerate the development of Indonesia’s integrated steel industry. Its progress has been marked by the inauguration of various factories and supporting facilities. In 1977, President Suharto inaugurated several factories, including those for reinforced concrete and steel profiling, along with the Cigading Port.

Two years later, the construction of facilities for sponge iron, steel billets, wire rods, a 400 MW steam power plant, a water treatment centre, and PT KHI Pipe was completed and became fully operational. In 1983, factories producing steel slabs, hot-rolled steel sheets, and more sponge iron were also completed and officially launched. Expansion and modernisation efforts continued into 1993.

Production facilities

Krakatau Steel has six production plants, making the company as the only integrated steel plant in the country. These plants produce many kinds of downstream products from upstream raw materials.

Production processes of steel products in Krakatau Steel starts from a direct reduction plant. This plant processes iron ore pellets into iron using natural gas and water.

The irons are then fed into electric arc furnaces in the slab steel plant and the billet steel plant. In these furnaces, the irons are mixed with scrap, hot briquetted iron, and other additional materials to produce two kinds of steels, namely slab steels and billet steels.

Slab steels are then reheated and rolled in a hot strip mill, becoming hot rolled coils and plates. The outcomes of this mill are widely used for shipbuilding, pipes, buildings, general structures, and other applications. Furthermore, hot rolled coils could be processed, re-rolled, and chemically treated in a cold rolling nill becoming cold rolled coils and sheets. The results are generally used to manufacture car bodies, cans, cooking wares, and other applications.