MOSCOW (MRC) -- Publicly listed petrochemical company Lotte Chemical Titan, a subsidiary of the South Korean Lotte Group, is studying the possibility of building a USD4 billion upstream plant to reduce imports of raw materials, said Thejakartapost.
Lotte Chemical Titan president director Peter Yoon said the new plant would be built on 40 hectares near its existing plant in Cilegon, Banten.
Around 40 percent of the total investment needed for the new plant would be taken from the company’s internal cash, while the rest would be from bank loans, Yoon said, adding that all investors would be from South Korea.
“We are still negotiating with the land owner [regarding the land price], therefore we have yet to decide when construction will start. But once it starts, it will take about three years,” Yoon said during a press conference in Jakarta.
Lotte Chemical, which currently has a production capacity of 450,000 tons of polyethylene per year, expects the upstream plant to boost production capacity to 1 million tons by creating ethylene.
Lotte Chemical Titan is a petrochemical company in the middle-downstream stage. It manufactures and distributes polyethylene products under the Titanvene brand.
Meanwhile, ethylene is raw material for polyethylene, propylene, and polypropylene. Final products in the downstream stage include plastic bags, water cups, hoses and pipes.
The company’s plan to build an upstream plant is also part of its strategy to compete with other petrochemical companies in the country, including its biggest competitor, Chandra Asri Petrochemical, which produces ethylene.
As MRC reported earlier, Hyundai Oilbank and Lotte Chemical Corp. established Hyundai Chemical as a new venture in the "oil refining and synthetic fiber materials business". The venture, owned 60 % by Hyundai and 40% by Lotte, will invest up to 1.2-trillion won, with production targeted to begin in the second half of 2016 at Hyundai’s Daesan plant in South Chungcheong province.
The Lotte Group currently has a presence in Indonesia via its subsidiary, Honam Petrochemicals, which acquired Malaysia’s polyolefin major Titan Chemicals in July 2010. Included in the acquisition was Titan’s Indonesian subsidiary - PT Titan Petrokimia Nusantara (TPN), which has a polyethylene (PE) production capacity of 450,000 tonnes/year.