Krakatau Steel
Krakatau Steel is Indonesia’s major integrated steel producer and a state-controlled industrial group headquartered in Cilegon, Banten.
Last updated October 30, 2026
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Overview
Krakatau Steel is Indonesia’s largest and best-known integrated steel producer. Based in Cilegon, Banten, on the western tip of Java near the Sunda Strait, the company was created to establish a domestic steel industry capable of supporting national industrialization, infrastructure development, and higher-value manufacturing. Its name refers to Krakatoa, the volcanic island and volcano in the Sunda Strait. The company’s origins lie in the Trikora Steel Project, a state-led initiative developed during President Sukarno’s administration. Planning for a national steel industry accelerated in the 1950s, when Indonesian officials and foreign consultants examined the country’s need for domestic iron and steel production. Cilegon was selected because of its available land, access to water, proximity to ports and transport routes, and suitability for receiving raw materials. A development agreement with a Soviet foreign-trade organization was signed in 1960, and the project was formally inaugurated in 1962 under the name Cilegon Steel Mill. Political and economic instability subsequently interrupted construction. The project resumed in the late 1960s and was reorganized as PT Krakatau Steel under Indonesian government regulation in 1970. The company’s legal establishment was formalized the following year. During the 1970s and 1980s, Krakatau Steel developed an increasingly integrated industrial complex containing direct-reduction facilities, electric-arc furnaces, slab and billet production, rolling mills, utilities, water treatment, power generation, and port infrastructure. These assets enabled the company to produce steel from iron-ore pellets and other inputs through several stages rather than operating only as a downstream processor. Its principal product chain begins with direct reduction, in which iron-ore pellets are converted into iron using natural gas and water. Electric-arc furnaces then produce slabs and billets, using combinations of reduced iron, scrap, hot-briquetted iron, and other charge materials. Slabs are rolled into hot-rolled coils and plates, while further cold rolling produces cold-rolled coils and sheets. Billets are processed into wire rod. These materials serve construction, shipbuilding, general engineering, pipelines, automotive components, packaging, household goods, fasteners, springs, and other industrial applications. Krakatau Steel has expanded beyond primary steelmaking through subsidiaries, joint ventures, logistics operations, utilities, industrial-estate management, port services, and downstream manufacturing. Affiliated businesses include operations connected with pipes, tinplate, galvanized steel, steel service centers, industrial water, power, logistics, cement-related materials, machinery, and industrial infrastructure. A major partnership with POSCO created Krakatau POSCO, an integrated steel joint venture in Cilegon. Other collaborations target automotive-grade cold-rolled and hot-dip galvanized steel. The company listed on the Indonesia Stock Exchange in November 2010 while remaining state-controlled. In 2021, it established Krakatau Sarana Infrastruktur as a subholding for industrial-estate, water, electricity, and port businesses. This structure reflects Krakatau Steel’s effort to organize its industrial-support assets and present them as an integrated infrastructure and services platform. Krakatau Steel remains a strategically important Indonesian industrial brand, although its performance is affected by steel-price cycles, import competition, raw-material costs, energy prices, debt burdens, and fluctuations in domestic industrial demand.
History
Indonesia’s modern steel-industry ambitions developed in stages. A small iron-smelting furnace had operated in Lampung during the Dutch colonial period, using local ore and coal to make crude steel for agricultural and plantation equipment. A later Japanese-era furnace in South Kalimantan represented a more modern attempt at iron production, but wartime disruption and the Indonesian National Revolution prevented these efforts from becoming the foundation of a national industry. Serious post-independence planning resumed in the mid-1950s. Industry and mining officials, together with Indonesia’s national planning authorities, examined the requirements for an integrated steel plant that could reduce dependence on imported materials and provide inputs for industrial development. A feasibility study supported by the West German consulting organization WEDEXRO helped shape the Trikora Steel Project. Cilegon was chosen as the site because it offered substantial non-agricultural land, water resources, port access, and connections to Java’s industrial economy. A development agreement with a Soviet all-union foreign-trade organization was signed in June 1960. The project was inaugurated on May 20, 1962, initially as the Cilegon Steel Mill. Construction was then halted amid severe political and economic turmoil, including the crisis surrounding the September 30 Movement. After several years of inactivity, the project was revived as part of the government’s industrial-development program. Government Regulation No. 35 of August 31, 1970 provided the basis for establishing PT Krakatau Steel, and the company’s legal formation was recorded in a notarial deed in Jakarta on October 23, 1971. The first major development phase concentrated on creating a complete industrial complex rather than a single mill. During the 1970s, facilities and supporting infrastructure were commissioned for reinforced concrete and steel profiles, port operations at Cigading, sponge iron, billets, wire rod, power generation, and water treatment. In 1977, President Suharto inaugurated a number of the complex’s facilities. By 1979, additional direct-reduction, steelmaking, utilities, and downstream assets had entered operation. In 1983, slab production, hot-rolled sheet production, and further sponge-iron capacity were completed. Modernization and expansion continued into the early 1990s. The resulting production system used direct reduction to convert iron-ore pellets into iron, followed by electric-arc-furnace production of slabs and billets. Slabs were processed through hot-strip and cold-rolling operations, while billets were converted into wire rod. The company’s product range consequently extended from primary steel inputs to materials used in shipbuilding, pipelines, buildings, industrial structures, vehicles, cans, cookware, springs, bolts, nuts, piano wire, and steel cord. Krakatau Steel subsequently developed a broad group of subsidiaries and partnerships. These included businesses involved in pipes, tinplate, logistics, industrial water, power, port operations, machinery, cement-related products, steel service centers, and industrial estates. Krakatau POSCO became one of the group’s most significant steel partnerships, while the Krakatau Nippon Steel Sumikin venture added galvanized-steel capability for automotive applications. In 2014, subsidiary PT KHI Pipe Industry opened a second steel-pipe plant in Cilegon, aimed particularly at oil and gas applications. The company’s 2010 initial public offering placed Krakatau Steel on the Indonesia Stock Exchange and added a public-market dimension to its state-enterprise role. In 2021, Krakatau Sarana Infrastruktur was established as a subholding encompassing Krakatau Industrial Estate Cilegon, Krakatau Tirta Industri, Krakatau Daya Listrik, and Krakatau Bandar Samudera. The reorganization grouped industrial land, water, energy, and port services under one platform. Krakatau Steel therefore operates not only as a steelmaker but also as the center of an industrial ecosystem supporting manufacturing in Cilegon and Indonesia.
- 2021
Krakatau Sarana Infrastruktur established
[1]A subholding was created for the group’s industrial-estate, water, electricity, and port businesses.
- 2017
Galvanized-steel plant begins operation
[1]The Krakatau Nippon Steel Sumikin plant in Cilegon began operating in September.
- 2014
Second KHI Pipe Industry plant inaugurated
[1]A second steel-pipe facility was inaugurated in Cilegon, strengthening the group’s position in pipe products for oil and gas uses.
- 2012
Krakatau Nippon Steel Sumikin established
[1]Krakatau Steel and Nippon Steel created a joint venture focused on cold-rolled and galvanized steel for Indonesia’s automotive market.
- 2010
Initial public offering
[1]Krakatau Steel listed its shares on the Indonesia Stock Exchange on November 10.
- 1983
Slab and hot-rolling capacity completed
[1]Slab production, hot-rolled sheet production, and additional sponge-iron facilities were completed and launched.
- 1979
Core supporting facilities become operational
[1]Sponge-iron, billet, wire-rod, power-generation, water-treatment, and pipe-related facilities were completed or brought into operation.
- 1977
Initial Cilegon facilities inaugurated
[1]Steel-profile, reinforced-concrete, and port-related facilities were among the assets inaugurated during the first major development phase.
- 1970
PT Krakatau Steel established
[1]Government Regulation No. 35 provided for the revival and establishment of PT Krakatau Steel as the national steel enterprise.
- 1962
Cilegon Steel Mill inaugurated
[1]The project was formally inaugurated at Cilegon on May 20, although subsequent political and economic turmoil stopped construction for several years.
Products and positioning
A strategic, state-controlled Indonesian steel producer positioned around integrated domestic manufacturing, industrial self-sufficiency, infrastructure supply, and downstream support for construction, energy, automotive, transport, and general manufacturing.
Primary steelmaking input
Direct-reduced iron
Iron-ore pellets are reduced using natural gas and water to create iron feedstock for the group’s electric-arc furnaces. This upstream stage supports the integrated Cilegon production route and supplies material for subsequent slab and billet manufacture.
Semi-finished steel · 1983
Slabs
Slabs are produced in electric-arc furnaces and serve as the feedstock for flat-steel rolling. They are reheated and processed into hot-rolled coils and plates for construction, shipbuilding, pipes, buildings, and general industrial structures.
Semi-finished and long steel · 1979
Billets and wire rod
Billets are cast steel units that are rolled into wire rod. Wire rod is used in products such as fasteners, piano wire, steel cord, springs, bolts, nuts, and other drawn or formed industrial components.
Flat steel · 1983
Hot-rolled coils and plates
Hot-rolled products are made by reheating and rolling slabs. They provide relatively thick and versatile steel for shipbuilding, pipelines, structural applications, buildings, machinery, and other heavy industrial uses.
Flat steel
Cold-rolled coils and sheets
Hot-rolled coil can be further rolled and chemically treated to produce thinner, smoother cold-rolled steel. These products are used for vehicle bodies, cans, cookware, appliances, and other applications requiring more controlled surface and dimensional characteristics.
Coated steel · 2017
Galvanized steel
Hot-dip galvanized and related cold-rolled products are manufactured through the Krakatau Nippon Steel Sumikin joint venture. The line was developed especially to serve Indonesia’s automotive industry and other applications requiring corrosion-resistant coated sheet.
Downstream steel products
Steel pipes
Through PT KHI Pipe Industry and related operations, the group manufactures steel pipe products, including capacity aimed at oil and gas applications. A second Cilegon facility was inaugurated in 2014 to expand this downstream business.
Brand decisions
2021
Creation of an industrial-infrastructure subholdingStrategyBackground
Krakatau Steel owned several businesses that supported industrial production but operated across separate areas including land, water, electricity, and port services.
Action taken
The company established Krakatau Sarana Infrastruktur and placed four key subsidiaries under the subholding: Krakatau Industrial Estate Cilegon, Krakatau Tirta Industri, Krakatau Daya Listrik, and Krakatau Bandar Samudera.
Aftermath
The reorganization created a more vertically coordinated industrial-services platform alongside the group’s steelmaking operations.
2010
Public listingOtherBackground
After decades as a state enterprise, Krakatau Steel sought access to public equity markets while continuing to serve a strategic role in Indonesia’s industrial economy.
Action taken
The company conducted an initial public offering and listed its shares on the Indonesia Stock Exchange on November 10.
Aftermath
Krakatau Steel became a publicly traded state-controlled company, increasing disclosure and market exposure.
1970
Revival of the national integrated-steel strategyStrategyBackground
Political and economic disruption had suspended the Trikora Steel Project after its 1962 inauguration. Indonesia still regarded domestic steel production as important to industrial independence and national development.
Action taken
The government revived the project through Regulation No. 35 and established PT Krakatau Steel as the vehicle for developing an integrated steel complex in Cilegon.
Aftermath
The decision initiated the company’s long construction and expansion program, including steelmaking, rolling, utilities, port, and water infrastructure.
Recent events
- 2021
Krakatau Sarana Infrastruktur is formed as a subholding[1]
Other
Krakatau Steel established a subholding that brought industrial-estate, water, electricity, and port activities into a more vertically coordinated industrial-services structure.
- 2017
Krakatau Nippon Steel Sumikin galvanized-steel plant begins operation[1]
Product launch
A Cilegon galvanized-steel facility operated through a joint venture with Nippon Steel was commissioned to supply cold-rolled and hot-dip galvanized products, particularly for Indonesia’s automotive sector.
- 2010
Krakatau Steel completes its initial public offering[1]
Other
Krakatau Steel became a publicly traded company on the Indonesia Stock Exchange while retaining state control.
- 1970
Krakatau Steel is established as Indonesia’s national steel producer[1]
Other
The Trikora Steel Project was resumed and reorganized through Indonesian government regulation, creating PT Krakatau Steel as the institutional basis for an integrated national steel industry.
Sources1 sources
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