Deputy of Ministry of State-Owned Enterprises Ahmad Bambang - Photo by SOEs Ministry

JAKARTA (TheInsiderStories) – The state-owned port operator, PT Pelabuhan Indonesia II will acquire shares of PT Krakatau Bandar Samudera (KBS), unit of steel maker PT Krakatau Steel Tbk (IDX: KRAS) before list it shares through Initial Public Offering (IPO), said one official on Wednesday (06/06). Currently KBS manages Cigading Port in Banten province.

Deputy for the Ministry of State Own Enterprises (SOEs), Ahmad Bambang told reporters, the company also known Indonesia Port Container (IPC) will acquire 49 percent shares of KBS. Following the acquisition plan, he said, KSB will go IPO at the Indonesia Stock Exchange.

President Director of Krakatau Steel Mas Wigrantoro Roes Setiyadi has targeting two subsidiaries are ready go IPO next year. Spokesman of KRAS Suriadi Arif adde, that the IPO preparation process is ongoing and is in the stage of selection of supporting professions.

In 2017, KBS claimed earn revenues of around Rp 900 billion with profits of around Rp 192 billion. The pier capacity reaches 17.6 million tons per year and its expected the capacity of the dock jumped to 40 million tons in 2020. At that year, KBS hope the revenue will reach Rp 1.2 trillion and net profit reaches Rp 200 billion.

Cigading Port – Photo by KBS

Cigading port was established to provide loading and unloading facilities for Krakatau Steel Company (KSC) raw materials, products and spare parts. In 1970, the government appointed state-owned energy company PT Pertamina to take over the operations under the original name of the Trikora Steel Plant and at the time was established by KSC.

KSC immediately began land clearing to expand facilities to produce billets, sponges and other materials. In 1975 the government through the Ministry of Industry took over the operation of KSC due to financial difficulties being experienced by Pertamina.

An integrated strategic plan developed and implemented to develop PT. Krakatau Foundry and Rolling Mill made KSC the largest integrated steel plant in Southeast Asia at the time.

In the same year, Krakatau Steel began building the first pellet moor with a length of 300 meters and an apron of 33 meters. The dock was built to accommodate the 50,000 DWT vessel which was inaugurated by the President in 1997.

The construction of a 270-meter sponge dock followed the completion of the pellet pier. The dock is also to accommodate a 50,000 DWT vessel. The mill mill began production in the same period.

A dock for barges was completed in 1984, and in 1990 an additional pellet pier was built by expanding an existing 285-meter dock with an apron of 25.2 meters. This latest dock, was completed in 1992 and able to accommodate 70,000 DWT ships.

In February 1995, the construction of a dock for scrap steel began. In 1997 the pier was completed with a length of 240 meters.

In 1996, Krakatau Steel released the management of Cigading port for its subsidiary KBS. This is part of a restructuring strategy created by the publicly listed firn to operate Cigading port with professionals.

State-owned steel producer KRAS itself set a 40 percent higher sales volume target for 2018 rise 40 percent to 2,8 million tons driven by an expectation of better domestic steel demand. The Southeast Asia’s largest economy, is expecting size-able demand for steel for infrastructure projects, shipbuilding and the automotive industry in the coming years.

Domestic steel consumption is expected to surge by between 6 per cent and 9 per cent this year from the 10.4 million tons estimated last year, according the Indonesian Iron and Steel Industry Association. At present, the country imports between 35 percent and 40 percent of the total annual demand for steel due to limited capacity in the local industry.