Chandra Asri boosts polypropylene production

JAKARTA: PT Chandra Asri Petrochemical Tbk (CAP) adds more factory machines as part of debottlenecking to boost the production of polypropylene (PP) to 480,000 tons from 360,000 tons annually.The expansion plan needs investment of IDR300 billion and the operation is expected to be effective in May 2011.CAP, a company resulted from a merger between PT Chandra Asri and PT Tripolyta Indonesia Tbk that has been effectively operating since January 1, will also buy machines to increase production capacity of ethylene to 1 million tons from 600,000 annually.We will increase the production of PE in the next 3 to 5 years, from 320,000 tons annually to 540,000 tons annually, Suryandi, Director Corporate Secretary & Investor Relations at CAP, yesterday.Director of Basic Chemical Industry in Directorate General of Manufacturing-Based Industry in Ministry of Industry Tony Tanduk said that the government supports the expansion of Chandra Asri.He thought that the presence of the propylene producers is very important to fill the need of domestic plastic downstream industry.Everywhere, developed countries have to own chemical industry to meet the need of domestic downstream industry. The government surely supports and will give facilities for the companies making expansion, by giving special incentive. The incentive may be given based on the need and the request from Chandra Asri to support the production expansion, Tony said.Butadiene projectCAP expands the petrochemical product in line with the construction of the first butadiene factory in Indonesia, with US$100 million investment. The construction of the factory will start in June 2011 and is scheduled to complete by the middle of 2013. The factory is designed to produce 100,000 tonsannually.Butadiene is a compound of synthetic rubber, which is used as the raw material for producing tires. Butadiene is also used as a compound for other automotive components, especially the plastic-based ones.Indonesia has been importing butadiene from Japan and South Korea. Later, our butadiene production will supply domestic industries and exports. With butadiene available domestically, production cost of tires and automotive parts can be curbed, he said.Secretary General Indonesian Association of Aromatic, Olefin and Plastic Industries (INAPlas) Fajar A.D. Budiyono said that the merger of Chandra Asri and Tri Polyta guarantees the availability of raw material supply for downstream chemical industry.Problem of raw material is solved by intense expansion after merger. Moreover, the energy consumption is more efficient, Fajar said.He mentioned that the needed naphtha in national petrochemical industry reaches 1.7 million tons annually and it has been filled by imports. Meanwhile, the need of PP is 700.000 tons annually, of which 300,000 tons are supplied from abroad.With expansion of the company after merger, Indonesia needs no more imports of raw material for plastic, naphtha, and PP industries. By 2015, after the investment of Chandra Asri, downstream chemical industry will face no more raw material constraint because the supplies come from domestic, Fajar explained.Separately, First Chairman Association of Indonesian Automotive Industries (Gaikindo) Jongkie D. Sugiarto viewed that the expansion of Chandra Asri will strengthen the supply of domestic automotive components.Jongkie said that 20% of the total automotive components is plastic, while the remaining is dominated by metal.Automotive industry supports the expansion because it guarantees the supply of plastic material in domestic market. If the supply comes from local industry, it will not only be cheaper, but also increase the local content to 60%, he explained. (T04/NOM)