Jakarta. Indonesia's biggest petrochemical producer Chandra Asri Petrochemical held a groundbreaking ceremony for a new $350 million polyethylene plant at its petrochemical complex in Cilegon, West Java, on Friday (02/02).
Polyethylene is one of the raw materials used for packaging of food and beverages, electronics and cosmetic products. The company seeks to anticipate the country's growing demand for the plastic.
The new facility will add 400,000 metric tons of polyethylene to Chandra Asri's annual production capacity, bringing up the company's total capacity to 736,000 tons. Chandra Asri expects the plant to start operations in early 2020.
The facility will produce high-density polyethylene, linear low-density polyethylene and metallocene, which are used for plastic bags, bottles, toys, containers and many more products.
"Our new plant will be an additional source [of supply] for the domestic market, which also will reduce the import [of polyethylene]," Chandra Asri Petrochemical president director Erwin Ciputra said in a statement on Monday.
In 2016, Indonesia produced only 833,000 tons of polyethylene, while its domestic consumption was around 1.4 million tons, according to data from industry consultation firm Nexant.
"The [domestic consumption] figure will keep growing in the long run," Erwin said.
Chandra Asri booked $250.6 million in net income in the first nine months last year, a 15.8 percent increase from the corresponding period in 2016. Its revenue increased by 28.6 percent to $1.79 billion in the same period.
Chandra Asri's holding company Barito Asia Pacific announced in December that it will issue new shares to raise up to $1 billion in the first quarter this year.
The proceeds will be used to acquire a majority stake, or 66.7 percent, in Star Energy Group Holdings, a Singapore-based utility company.
Star Energy currently operates three geothermal power plants in West Java, and is also active in the oil and gas industry.
Barito Pacific and Star Energy signed a conditional purchase agreement on Dec. 12.