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Construction of the furnace is 62.4% complete as of September 30, the steelmaker said in a filing to the Indonesia Stock Exchange on Wednesday November 12. The unit was originally scheduled to start operation in March 2016.

The facility, which will be the state-owned steelmaker’s first fully-owned blast furnace at an investment cost of $656.3 million, will help it reduce electricity consumption in future, the company said.

The whole complex, which will consist of a blast furnace, sintering plant, coke oven plant, pig iron caster and stockyard, has capacity to produce 1.2 million tonnes of hot metal and pig iron per year.

Krakatau Steel also said its joint-venture steel mill Krakatau Posco – which began operations last December – is currently running at 85% of its production capacity.

Besides supplying steel plates to the shipbuilding sector, construction and manufacturing sector in the domestic market, Krakatau Posco value-adds to Krakatau Steel through the supply of 1 million tonnes per year of slab as a feedstock to Krakatau Steel for its hot strip mill.

Krakatau Steel benefits from this raw material flow as the supply enhances its cost competitiveness, it said.

Krakatau Steel’s core earnings slumped 99.73% year-on-year for the nine month period to September 30. Earnings before interest, taxes, depreciation and amortisation (Ebitda) for January-September totalled just $200,000, compared with $75.1 million a year earlier.