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JAKARTA. Publicly listed PT Krakatau Steel reportedly wants to buy out its local partners to increase its stake in IndoJapan, a jointly held automobile sheet-steel company, to 20 percent.
IndoJapan commissioner Wawan Hernawan said that auto parts producer PT Adyawinsa Dinamika and distributor PT Dwijaya Sentosa Abadi agreed to sell their stakes in PT IndoJapan Steel Center in an internal deal that was reached in early May.
Krakatau Steel currently holds a 10 percent stake in IndoJapan Steel, while 30 percent stakes are held by PT Adyawinsa Dinamika and PT Dwijaya Sentosa Abadi and the Nippon Steel Trading Co., Ltd. — the trading arm of Japan’s largest steel producer, Nippon Steel Corporation.
“Nippon will have up to 80 percent. Meanwhile, Krakatau Steel will absorb [an additional] 10 percent,” Wawan said on Thursday in Jakarta.
He said that Krakatau would pay Rp 10 billion (US$1.06 million) for the stake as IndoJapan’s valuation had reached Rp 100 billion.
Krakatau Steel would supervise general operations, purchasing, financing and human resources at IndoJapan after Adyawinsa and Dwijaya sold their stakes, Wawan said.
Wawan, who was previously a vice president of corporate communication for Krakatau Steel, said he would likely be named IndoJapan’s director and a Krakatau Steel executive would replace him as an IndoJapan commissioner.
“We will still need to wait for a shareholders meeting of IndoJapan — hopefully, next week. We hope that the new board will make IndoJapan more solid and able to make decisions faster,” he said.
The shareholders will vote on changes to IndoJapan’s existing appointment system, where Nippon names the firm’s president director, Dwijaya names a director and Adyawinsa names a deputy director.
Krakatau Steel’s new president director, Irvan Kamal Hakim, confirmed that the company wanted to up its stake in IndoJapan, declining to specify a timeframe.
“We don’t imagine becoming a majority stakeholder. As mandated by previous management, it’s not a matter of how big our share is but the volume of steel to be delivered to IndoJapan,” Irvan said.
At Krakatau Steel’s annual shareholders meeting on Thursday, Irvan was appointed president director, replacing Fazwar Bujang, who will remain president commissioner of Krakatau Steel subsidiary PT Krakatau Posco.
Irvan said that, Krakatau Steel would continue and complete ongoing projects under the new management, including construction of IndoJapan’s plant at the Mitra Karawang Industrial Estate in West Java.
Krakatau Steel will supply raw material for the plant, which will have an annual production of 120,000 tons of sheet steel for automotive industry.
The initial investment for the plant is expected to reach $38 million. Wawan said that the company was selecting a contractor to build the plant and expected it would start operations early next year.
Another project is development of a steel plant by subsidiary
PT Krakatau Posco, which is a joint venture with South Korean steel giant Pohang Iron and Steel Company.
Irvan said that the company also recently established wholly owned subsidiary PT Krakatau National Resources.
“Krakatau National Resources will help Krakatau Steel in the procurement of raw material when our blast furnace is finished. The new company became effective two days ago,” Irvan said.
Krakatau Steel is also working on the construction of a blast-furnace complex in Cilegon, Banten. (Raras Cahyafitri, The Jakarta Post)
