INDONESIA: Chandra Asri to spend more than $90 million on expansion

“Next year’s capital expenditure will be between $85 and $90 million. That is not including expenditure on a joint venture with Pertamina as we are still studying the recently signed agreement,” Chandra Asri corporate secretary Suryandi said.

The company has signed an agreement with state-owned PT Pertamina to establish and operate a polypropylene factory in Indonesia. The factory will be built in Balongan in Indramayu, West Java with around $200 million in investment and will have production capacity of 250,000 tons per year.

Construction is expected to start next year and be completed in 2015.

Pertamina will have 51 percent share in the venture while Chandra Asri will hold the remaining 49 percent.

The allocated capital expenditure, according to Suryandi, will also be used to finance the company’s current projects.

Chandra Asri, the largest petrochemical company, kicked off earlier this year the construction of the country’s first butadiene plant in Cilegon, Banten. The butadiene plant, which needs total investment of $170 million, is expected to start production next year.

The butadiene plant will be operated by Chandra Asri’s subsidiary PT Petrokimia Butadiene Indonesia.

“Up to the end of next year, we will spend $120 million [for the butadiene project],” Petrokimia Butadiene president director Suhat Miyarso said.

Besides the butadiene plant, Chandra Asri is also increasing production capacity of its existing polypropylene plant from 360,000 tons to 480,000 tons per year.

The new and existing polypropylene plants are expected to help Chandra Asri to meet the country’s growing demand.

Indonesia’s plastic consumption reached 2.8 million tons in 2011, of which about 70 percent was for polypropylene and polyethylene with the remaining 30 percent for polyvinyl chloride (PVC) and polyethylene terephthalate.

The company reaped $1.71 billion in revenue during the first nine months ofthe year, down by about 2 percent compared to $1.75 billion in the same period last year. The company is suffering from lower selling prices of its products as a consequence of the global crisis, which has affected polymer demand.

Further spending for operational and non-operational pushed the company to a net loss of $61.14 million up to the third quarter of the year, a significant drop compared to $13.15 million in net profit in the same period last year.

The company is currently 59.35 percent owned by publicly listed PT Barito Pacific — controlled by prominent businessman Prajogo Pangestu — 30.03 percent by Thailand’s SCG Chemicals Co., Ltd., 5.52 percent by Marigold Resources Pte. Ltd., and the remaining by the public.

Source: Daily "The Jakarta Post", Jakarta; 7 Dec 2012

(Syed Rashid Ali, Karachi, Pakistan)