Krakatau Steel investing US$601m for new hot metal plant.

State owned steel producer PT Krakatau Steel has begun the construction of a new blast furnace plant at the company ?s industrial complex in Cilegon, Banten to produce hot metal with a capacity of 1.2 million tons a year, Kontan business daily reported Thursday.

The company?s Vice President for Corporate Communication, Wawan Hermawan, said in Jakarta on Wednesday that the plant, which would absorb investment of US$601 million, was scheduled for commercial operation in 2014.

He said that Krakatau Steel had named a consortium comprising of Metallurgical Construction Corporation of China and Krakatau?s subsidiary Krakatau Engineering to build the new plant. The contract was signed in November 2011.

In addition, Krakatau is also expanding the production capacity of its hot strip mill to 3.5 million tons a year from 2.4 million tons at present. The expansion project is scheduled for completion in 2014. In 2011, the production capacity of the hot strip mill was increased to 2.4 million tons from 2 million tons.

Krakatau is also engaged in other revitalization projects including the expansion of the production capacity of the iron making/direct reduction to 1.74 million tons from 1.5 million tons at present. This project will be completed this year.

Krakatau also increases the capacity of its steel making/slab steel plant to 2.1 million tons from 1.8 million tons at present. (*)