Jakarta. Lotte Chemical Titan, a local petrochemical unit of South Korean conglomerate Lotte Group, plans to start construction of a $4 billion naphtha cracker plant in Indonesia next year, a minister said on Friday (17/02).
The project, which has been delayed for three years due to land acquisition problems, will help Indonesia reduce expensive chemical imports, Industry Minister Airlangga Hartarto said.
Lotte Chemical has secured 50 hectares of land in the Krakatau Steel industrial complex in Cilegon, Banten, and plans to add another 30 hectares with a land reclamation project, said Muhammad Khayam, a director at the Ministry of Industry.
The company plans to complete the front-end engineering design this year and start construction next year.
The plant will have a capacity to produce 1 million tons of ethylene – the raw material used in the production of plastic – and 600,000 tons of propylene annually.
The facility will be located close to another that is owned by Chandra Asri Petrochemical – controlled by Indonesian tycoon Prajogo Pangestu's Barito Pacific and SCG Chemicals – which is currently being expanded to double its annual production capacity to 2 million tons of ethylene.
"This would boost our production to 3 million tons a year, so we would have enough to satisfy domestic demand," the minister said.
Indonesia imported around $15 billion worth of chemicals for its local industrial needs. Khayam estimates that Lotte Chemical's naphtha cracker plant will be able to eliminate $1.5 billion in chemical imports, when it starts operations in either 2023 or 2024.