The Jakarta Globe reported that Krakatau Steel plans USD 400 million to USD 450 million in capital expenditure in 2012 to help finance projects including the construction of a slab steel plant.

Mr Sukandar finance director at Krakatau Steel said that "The company will partly finance the investment with bank loans." He added that the company has been talking to local and overseas banks.

Mr Sukandar said that next year's CAPEX approximately matches this year's figure at the state controlled company. The company has spent its entire CAPEX budget this year, but did not provide details of the projects on which the funds were spent.

Krakatau is benefiting from growth in the economy, which the government forecasts to expand by 6.3% in 2012, down from an estimated 6.5% in 2011.

Krakatau said earlier this year that it plans to establish a unit to ensure it has enough iron ore and coking coal for production. The subsidiary, to be called Krakatau Natural Resources, would be responsible for investing in the mining sector, either through the acquisition of iron ore miners and coking coal producers or through setting up its own mining operation to secure the commodities.

Mr Fazwar Bujang president director of Krakatau said in September 2011 that Krakatau currently sources its raw materials from small iron ore mines scattered across the country. The steel maker has yet to establish the coking coal supply in its USD 6 billion JV with South Korean company POSCO.

Mr Fazwar said that sales are forecast to increase by 10% to 13% in 2012.

(Sourced from www.thejakartaglobe.com)