PT Krakatau Steel, Indonesia’s largest steelmaker is to go ahead with the building of a blast furnace this year at a cost of $601M despite total profits falling 3.6% to Rp 1.02tr (US$111.18M) and operating profits crashing 65% to Rp358bn on rising costs of inputs.

Presently Krakatau Steel produces DRI using natural gas. The new blast furnace will have a capacity of 1.2Mt/y and is planned for completion in 2014. Chinese state owned Metallurgical Group Corp (MCC) have been awarded the contract to build the furnace. Iron production capacity will then total 1.74Mt and steelmaking capacity to 2.1Mt over the present 1.8Mt.

Krakatau Steel produces hot rolled coil and plans to expand the capacity of its mill to 3.4Mt by 2014 from the current 2.4Mt.