Michellin’s Synthetic Rubber Plant To Start Operation 1Q 2018

Two unit of PT Barito Pacific Tbk (IDX: BRPT), PT Chandra Asri Petrochemical Tbk (IDX: TPIA) and PT Styrindo Mono Indonesia plans to merge - Photo by the Company

JAKARTA (TheInsiderStories) – Synthetic rubber manufacturer PT Synthetic Rubber Indonesia, a joint venture company of French tire maker Michelin and publicly-listed PT Chandra Asri Petrochemical Tbk (IDX: CAPC) is set to be operational in the first quarter (1Q) of 2018, to take advantage of growing tire demand, both at home and in other Asian countries.

The factory will use butadiene feedstock produced by PT Petrokimia Butadiene Indonesia, a subsidiary of CAPC, with an estimated capacity of 120 kilotons per annum of styrene butadiene rubber solution, its spokesman announced on Oct. 7.

However, to meet the needs of Mixed C4 as feedstock to produce Butadiene, management of CAP will increase the production of Ethylene, Propylene, Py-Gas, Mixed C4, by expanding production facility of Naphtha Cracker, which is underway.

Director and Corporate Secretary of Chandra Asri Suryandi has explained how the synthetic rubber processing plant, located in Cilegon, Banten needs an investment of US$435 million. Michelin owns 55 per cent stake in the joint venture firm, while the remaining shares are owned by PT Petrokimia Butadiene Indonesia, a subsidiary of Chandra Asri.

In its initial phase, most of the output would be exported to markets such as Thailand and China, and later shifted to domestic markets, when local consumption picks up, he added.  The collaborative facility will secure butadiene, the core raw material to produce synthetic rubber, from PT Petrokimia Butadiene.

The synthetic rubber plant is constructed by Chiba-based Toyo Engineering Corp. and detail engineering, procurement and construction (EPC) is carried out bu PT Inti Karya Persada Tehnik.

On another front of its business, holding company PT Barito Pacific Timber Tbk (IDX: BRPT) is also exploring opportunities to open new rubber plantations in Jambi and South Kalimantan, according to President Director of Chandra Asri Agus Pangestu. The area currently under its assessment covers between 60,000 and 80,000 hectares.

He added that the firm was interested not only in tapping the potential of the domestic market, but also in making Indonesia a regional manufacturing hub for exports.

National annual tire production currently exceeds 75 million, but with the robust growth in car and motorcycle production in Southeast Asia’s biggest economy, there is still enormous room for growth.

The Synthetic Rubber Indonesia’s plant is expected to reduce dependence on imported raw materials of tire and to support increased national tire production.

Barito, owned by prominent ‘Orde Baru’ tycoon Prajogo Pangestu, enjoyed its heyday in the timber business during the rule of his business crony, the late former President Soeharto.

Written by Linda Silaen, Email: linda.silaen@theinsiderstories.com