JAKARTA, Aug. (Xinhua) -- PT Krakatau Steel (KS), Indonesia's largest steel producer, signed a loan agreement worth 38.7 million euro (about 55.39 million U.S. dollars) with KFW IPEX Bank and HVBBank, the private news portal detikcom reported on Wednesday.

    "The loan will be used to finance revitalization of a hot strip coil factory," said the company's president director Fazwar Bujang after the signing ceremony here.

    Fazwar said that with the loan, its hot strip coil production could be increased.

    "With the revitalization, the factory is expected to operate in November 2010," he said.

    According to Fazwar, KS is also exploring a new loan worth 145million dollars to modernize the company which total budget amounts 200 million dollars.

    "Before the year's end, we would get 145 million dollars loan," said Fazwar.

    He said that the company would submit tender to western European banks on September or October.

    He said that the company is planning to increase its production on upstream iron making, midstream steel making and downstream hot roll coils in its factory in Cilegon of West Java province.

    "The iron making production will be increased from 1.5 million tons currently to 1.8 million tons, the steel making production will be increased to 2 million tons from currently 1.5 million tons per year while hot roll coils production to be increased to 2.4 million tons from 2 million tons," he said.

    More than 87 percent of KS's production is sold to the local market, mainly to construction companies, state shipyard PT PAL, and to gas stove and gas cylinder producers. The remainder is exported to Australia, India, Japan, Malaysia, New Zealand, Singapore and Spain.