Jakarta, INTI - COO of Krakatau Steel, Sidik Darusulistyo, emphasized that the availability of secure and affordable clean energy is a key factor in supporting the steel industry’s transition toward low-emission green steel production.
Sidik stated that the steel industry requires not only environmentally friendly energy, but also stable supply and competitive pricing to remain competitive in the global market.
“In the end, there are three things that must be considered. Energy must be secure, affordable, and only then green,” Sidik said during a discussion at Bandung Institute of Technology Jakarta Campus on Thursday.
Steel Industry Must Remain Competitive
According to Sidik, the transition toward green steel cannot be carried out hastily due to the industry’s relatively thin profit margins.
He explained that the steel industry’s EBITDA margin typically ranges between 5–7 percent, while net profit margins are only around 3–5 percent, requiring companies to be cautious in selecting decarbonization technologies.
“Because the margins are thin, we cannot take excessive risks. We have to adopt technologies that are already mature and proven,” he said.
Sidik added that energy and raw material costs remain the main drivers of steel production expenses.
He noted that natural gas prices in Indonesia are still higher than in competing countries such as China, where gas prices are below US$2 per MMBTU.
“Raw materials and energy are the main drivers of steel costs. We have to stay competitive,” he stated.
Krakatau Steel Prepares Decarbonization Strategy
Krakatau Steel has begun preparing decarbonization measures to address global carbon trade policies such as the Carbon Border Adjustment Mechanism (CBAM), which has started to be implemented in several export destination countries.
The company has developed a decarbonization roadmap through 2050, focusing on energy efficiency, industrial digitalization, renewable energy utilization, and the development of low-carbon technologies such as carbon capture utilization and storage (CCUS) and hydrogen.
“CBAM has been implemented since January, and the penalties related to CO2 emissions will continue to expand. This is one of our considerations to ensure we can continue exporting,” Sidik said.
During the same discussion, Zulfiadi Zulhan, professor at Bandung Institute of Technology, stated that the development of green steel requires massive clean energy support, particularly for green hydrogen production.
“If the energy supply issue has not been resolved, then we should not talk about green steel yet. Energy is the most important factor,” Zulfiadi remarked.
Conclusion
Indonesia’s steel industry is pushing toward green steel production, but industry leaders emphasize that secure, affordable, and reliable clean energy remains the key foundation for a successful and competitive transition.
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