机遇最大化--《财富》印度尼西亚，2024 年 9 月版
The performance of steel material values in the global market greatly influences Gunung Raja Paksi's (GGRP) performance. The rise or fall in the performance of this GGRP-listed issuer might be viewed as a report card. However, its strategic moves and ability to seize opportunities have become key weapons to ensure sustainable business growth.
As one of the companies consistently featured in the Fortune Indonesia 100 list since the fiscal year 2020, PT Gunung Raja Paksi Tbk has demonstrated impressive performance, particularly in its product sales. In fact, during the 2021 fiscal year, the company managed to turn its losses into significant profits. However, throughout 2023, global geopolitical conflicts led to weakened global steel demand and declining steel prices, impacting Indonesia's steel and iron exports. According to data from the Indonesian Iron and Steel Industry Association (IISIA), Indonesia's steel and iron exports decreased by around 3% in valuation, from USD 28.38 billion in 2022 to USD 27.49 billion in 2023.
This situation contributed to a 24.92% year-on-year (YoY) decline in GGRP's revenue in 2023. Previously, the company had experienced consistent revenue growth during the 2020–2022 fiscal periods. Financial reports show that GGRP's revenue fell from IDR 14.74 trillion in 2022 to IDR 10.94 trillion in 2023.
GGRP President Director, Fedaus, stated that in addition to geopolitical issues and various wars in several countries in 2023, Indonesia was also preparing for its General Elections and Presidential Elections in early 2024. "This has caused nearly every industry to adopt a 'wait-and-see' approach," he told Fortune Indonesia (20/8). "Nearly all sectors, not just steel, saw a decline in 2023."
Fortunately, Fedaus noted that the company, which began operations in 1970, managed to maintain its equity, growing positively by 14.7% to establish a foundation for sustainable returns to stakeholders. The company also refrained from major investments, focusing instead on maintaining stability.
Recognizing the sluggish global steel market in the past year, GGRP allocated USD 1 million from its 2022 net profit as reserve funds in June 2023. Meanwhile, the remaining net profit—amounting to USD 58.40 million—was recorded as retained earnings to strengthen capital structure, operations, and business development.
While GGRP acknowledged the decline in its performance in 2023, it is committed to accelerating financial growth for a positive 2024 and beyond. IISIA projects that Indonesia's steel and iron industry will maintain stable growth at around 5% annually, with significant opportunities in sectors such as infrastructure, property, and automotive.
However, the wide gap in steel supply between local products and cheaper Chinese imports presents a major challenge, slowing the absorption of domestic steel products. This is a continuation of the weakened global export market in 2023, which remains a key concern for GGRP.
"The global steel industry is currently facing overcapacity of nearly 625 million tons," Fedaus said. "This means the supply-demand balance in the market is off, with large steel manufacturers, especially in China, flooding global markets with cheaper products to reduce their excess supply."
Southeast Asian nations, including Indonesia, are already experiencing an influx of cheap Chinese steel, threatening local products' competitiveness. Meanwhile, Indonesia’s steel production capacity is only around 12–13 million tons, compared to a national demand of 18 million tons annually. "Our domestic utilization rate is just 55–65%, far below the 80–90% standard," Fedaus added.
Thus, Fedaus hopes the Indonesian government will provide protection to local steel industries, such as safeguards and anti-dumping measures. Indonesia currently has only 45 trade remedies, with 31 of them anti-dumping, significantly fewer compared to countries like the United States, Canada, or Thailand, which have 67 trade remedies, including 63 anti-dumping.
GGRP is particularly focused on the threat of cheap Chinese steel, but Fedaus emphasized that restoring the company’s financial performance remains the priority. Instead of directly countering challenges in the domestic and global steel markets, GGRP is channeling its efforts toward operational efficiency, which offers added value on multiple fronts.
Fedaus highlighted that the steel industry is often called the "mother" of various other industries, providing essential raw materials. However, it is also one of the biggest contributors to carbon emissions globally due to its high energy requirements.
According to the World Steel Association, every ton of steel produced emits 1.8–2.3 tons of carbon dioxide (CO2). For this reason, GGRP is committed to adopting electric arc furnace (EAF) technology, which uses approximately 70% scrap metal compared to blast furnace-basic oxygen furnace (BF-BOF) technology, which relies on only 20–30% scrap, with the remainder using iron ore and coal. "EAF significantly reduces carbon emissions compared to BF-BOF," Fedaus explained.
Additionally, GGRP is negotiating with PT Perusahaan Listrik Negara (PLN) to use electricity from renewable energy sources such as hydropower. To further maximize renewable energy use, GGRP has partnered with TotalEnergies ENEOS to install rooftop solar panels at its facilities, targeting 33 megawatts within four years. Currently, GGRP has achieved 9.3 megawatts of installed solar rooftop capacity, making it the largest solar rooftop facility in West Java. This has also led to operational cost efficiencies. "TotalEnergies handles the design and selects EPC (Engineering, Procurement, and Construction) partners, so we incur no upfront costs. Instead, we share the cost per kilowatt-hour with them, which is cheaper for us," Fedaus said.
Aligned with its environmental initiatives, GGRP has also adopted static var compensator (SVC) technology since mid-2023, which reduces energy consumption and carbon emissions from its electrical systems, saving 5–6% in energy use. "We’ve invested over USD 7 million in this facility," Fedaus stated.
Through its various ESG (Environmental, Social, Governance) initiatives, Fedaus ensures that GGRP adopts a "low-hanging fruit" approach—pursuing the most accessible, cost-effective, and swift opportunities. This enables the realization of circular economic value at GGRP. "We aim to ensure our ESG investments produce better, low-carbon products that can compete in the market with high quality. Low-carbon and energy-efficient products will add significant value to GGRP," Fedaus explained.
He believes that a well-targeted ESG strategy brings immense benefits, particularly during efforts to improve financial performance. "Two years ago, BNI (Bank Negara Indonesia) granted a USD 32 million sustainability-linked loan because GGRP achieved a good ESG score," Fedaus shared. "This allowed us to revitalize older, less efficient machinery in our steel plants."
Adhering to ESG principles has become crucial, especially as the steel industry faces global scrutiny. Strict green environment requirements and low-carbon emission certifications are being enforced in export-import practices, not only for semi-finished steel products like those GGRP produces but also for downstream products in sectors such as automotive and property.
With ESG value-add, Fedaus believes GGRP's products will remain competitive both domestically and globally. GGRP currently has two product lines: flat products, including hot rolled coils (HRC), steel plates, and coil plates; and downstream products such as electric resistance welding (ERW) pipes, cold rolled coils (CRC), lipped channels, spiral pipes, and welded beams. With a capacity of 1.2 million metric tons per year (Mtpy), 94–95% of GGRP’s market is domestic, with only 5–6% of products exported. Thus, Fedaus sees export markets as a significant opportunity for GGRP’s business growth. "Export markets, especially for low-carbon emission products, are typically demanded for projects like green buildings. We’re optimistic that our export products will grow 1–2% annually," he said.
Fedaus believes that GGRP's high-quality products can compete globally and thrive in Indonesia’s domestic market, which he considers strong. Ongoing infrastructure projects, including the development of the new capital city Nusantara (IKN), are catalysts for steel industry growth. However, Fedaus hopes the government and customers alike understand that quality products are not created cheaply. "Focus on quality, not just low prices. Quality comes with a cost and regulatory compliance processes," he concluded.