Cabot Corporation has prepared fund Rp1.4 trillion (US$100 million) to expand its factory in Cilegon, Banten. - Photo by Industry Ministry.

JAKARTA (TheInsiderStories) – United States-based Cabot Corporation (NYSE: CBT), the world’s largest producer of carbon black, through its subsidiary PT Cabot Indonesia – has prepared Rp1.4 trillion (US$100 million) to expand its factory in Cilegon, Banten. The funds aim to increase the company’s carbon black production capacity by 80,000-90,000 tons a year and masterbatches by around 20,000 tons a year.

Cabot Corporation’s Senior Vice President and President of Reinforcement Materials, Bart Kalkstein, said the increase in production capacity was carried out to meet the carbon black demand that continues to increase every year.

“As the world’s largest producer of carbon black, we have a special position to expand our steps globally to meet the needs of consumers in all regions of the world,” said Kalkstein at the groundbreaking ceremony of the factory construction in Cilegon, Banten on Thursday (11/21).

Kalkstein added that the expansion of production facilities in Cilegon is part of a global capacity building and a debottlenecking project that was announced in May 2018. The increased capacity enables Cabot to support the growth of the tire and rubber industry, as well as special carbon throughout the world.

Cabot has recorded significant developments in achieving the goal of increasing global carbon black production capacity by 300 thousand tons and will reach the target after the commissioning process of this new production facility.

Kalkstein revealed that the expansion of the carbon black plant is expected to be completed in 2021 and will be used to meet industrial demand in both the domestic and Southeast Asian markets, which continues to increase by four to five percent per year.

On the same occasion, Minister of Industry Agus Gumiwang Kartasasmita said that the government continues to encourage the growth of industries that produce imported substitute products. Therefore, efforts are needed to attract investment in the sector, which is expected to reduce the trade balance deficit and spur economic growth.

“We thank and give appreciation to PT Cabot Indonesia, who will build a carbon black and masterbatch factory in Indonesia. We are challenging Cabot Indonesia to be operational in early 2021,” Kartasasmita said.

The minister conveyed that the need for black carbon fiber in the domestic industry is still quite large, 70 percent of which is supplied from abroad.

“Based on the data we received, the need for carbon black in the country is 230 thousand tons per year. And, 70 percent of these comes from various countries, including China and India,” he said.

He hopes the factory construction process can run smoothly because it will substitute carbon black imports of 90,000 tons per year with a value of Rp1.5 trillion per year.

“Indeed, we are currently encouraging industries that produce import substitution. In addition, we are spurring export-oriented industries,” he stressed, calling for this project to prioritize the use of local components and labor.

The minister noted, the chemical industry contributed up to Rp166.89 trillion in 2018, and in the second quarter of 2019 amounting to Rp63.88 trillion. While the chemical industry’s export value touched $8.79 billion with a total investment of Rp26.2 trillion last year.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com