To sell or not to sell

11
Dahlan Iskan former Minister of State-Owned Enterprises

IO – Does Indonesia still need to have a steel factory? Or not? What if the steel factory keeps losing money? 

Usually, the question is the same: to sell or not to sell. Always a lot of theories. Two of them contradict each other. 

The defending party usually has a good reason: the country cannot progress without a steel factory. 

This thesis is true if we look at America, Britain, France, Japan and later China and South Korea. 

But it’s also not true if we see Singapore. 

The ‘pros for sale’ usually carry a practical view: why buy goats if you can buy satay easily and cheaply. 

Of course, there are additional emotional reasons. One is nationalism. The other is modernity-globalism. 

So Krakatau Steel continues to get sick but does not die. Nobody dares to turn it off. Nobody even dares to sell it. 

Even though so many are going after it. Mittal alone has tried to buy it three times: 1997, 1999 and 2008. 

Drama always happens in the process. Who wants to sell are then blasphemed. It always fails. 

I am fortunate to know many experts in the field of metallurgy. 

There aren’t many players in the steel field. Their community is small. Know each other. Hostile to each other. Devour each other. 

At least peek at each other. 

Steel consumers are also few. Steel traders generally know each other. All are read: which factory consumer is the trader. Also, take a peek at each other. Dropping each other. 

That is the basic character of the steel industry. What makes political policy-holders not easy to make decisions. 

Including closing or selling decisions. Or carry on the factory loss. 

Even including difficult when choosing who is worthy of leading a steel plant. 

The steel mill is in contrast to the factory of – for example – mobile phones and the like. 

Choosing a leader in a steel factory is much more difficult. 

Once choosing must be right for a long time. He/she must lead in a fairly long term. At least five years. If possible 8 years. 

Talking steelworks is a long-term talk. Strategic. Under the character of the steel industry. 

Never quickly change the leadership of a steel mill. Don’t get caught up thinking short term. That’s not the soul of a steel factory. 

Three times changing the boss of a steel factory in five years made the culture of the steel industry not formed. 

It could be that I was wrong in concluding it. I can accept other views that are more correct. 

So, does Krakatau Steel need to be sold or not? 

Look at the following numbers. The domestic steel demand – in 2019 – is 14 million tons. This figure tends to continue to rise. Especially if the Indonesian economy continues to skyrocket. The room to grow is still very large. 

Indonesia’s steel production is currently 7 million tons. It includes the latest stainless steel mill in Morowali, Southeast Sulawesi. 

This means, our steel production is only half of the domestic needs. 

Steel mills in the country are still needed. 

As long as the price can compete with imported steel. Especially from – you just continue the sentence. 

I am among those who regret not quickly deciding this: replace the gas used in Krakatau Steel with coal. It needs a lot of money. 

And Krakatau Steel again has no money. But money should be sought. 

Money has indeed been sought. But the priority at that time was to build a new steel plant. As well as coal energy materials. 

Oops, there is another reason. The replacement of old factories to coal cannot be done simultaneously. It must be gradual. The new factory must operate first. 

Overhauling the old one to the new. So that production does not stop. Especially for several years. 

There are many reasons for not doing an overhaul. Sometimes it makes sense. Sometimes not. 

What was decided at that time was just this: the new factory must no longer use gas. That is if the country’s gas policy is still valid. It must be designed using coal. 

The decision is working. One of the new factories there is already using coal. 

Looking ahead, the Krakatau Steel power plant must also be replaced. With a coal power plant. The gas generator can now cooperate with PLN. Only for the needs of Jakarta and surrounding areas. The need is increasingly felt when the power goes out. 

There is still a lot of hope there. It’s just that you have to be more patient. I cannot expect the results of a new step in three years. Especially not in two years. 

The life of the steel mill is now entirely in the hands of the ruling angel: the government. The breath of steel mills is closely linked to import policies, energy policies and political policies. 

The only consolation is: steel doesn’t suffer alone. The cement industry is ready to accompany it.