JAKARTA (TheInsiderStories) – Indonesian fertilizer producer, PT Pupuk Sriwijaya (Pusri) started operating the Pusri 2B fertilizer plant in Palembang, South Sumatera, said the company in a press statement on May 11. The new plant has a production capacity of 907,500 tons of urea and 660,000 tons of ammonia per year.
Pusri 2B factory constructed as part of the national fertilizer industry revitalization program in efforts to supporting food security and enhance competitiveness.
The subsidiary of state-owned fertilizer maker PT Pupuk Indonesia Holding Company has invested Rp8.5 trillion (US$607.14 million) for the new plant built by consortium PT Rekayasa Industri and Toyo Engineering Industries from Japan.
At the same time, Pupuk Indonesia also operate Kaltim-5 plant owned by its other unit PT Pupuk Kalimantan Timur (Pupuk Kaltim) and Amurea Plant 2 owned by PT Petrokimia Gresik. After completing the three factories, the company declares the construction of a four NPK plant project across the archipelago.
NPK fertilizer is a complex fertilizer comprised primarily of the three primary nutrients required for healthy plant growth.
The project will be built over 2018 and 2025 with a total capacity of 2.4 million tons. The NPK plants will be built and operated in PT Pupuk Iskandar Muda, Pusri Palembang, PT Pupuk Kujang and Pupuk Kaltim.
The NPK plant in Pupuk Iskandar Muda of 1 million tonnes per annum, Pupuk Kujang Cikampek of 200,000 tonnes per year, Petrokimia Gresik is 500,000 tonnes per year and Pupuk Kaltim is 1 million tonnes a year.
As an initial step, the company construct NPK mill with production capacity 2×100.000 tons per year. Production from this plant is projected to be able to meet market and agricultural plantations in Sumatra.
The government continues to promote balanced fertilization pattern through the use of NPK fertilizer. Based on the market analysis, the potential of NPK fertilizer for the plantation sector is also very promising because domestic market demand is still high.
The project was built through synergy with state-owned construction provider PT Wijaya Karya Tbk (IDX: WIKA) with costs worth of Rp521 billion, with a target for completion in September 2019.
According to the CEO Aas Asikin Idat, NPK market has a big potential in Indonesia, which is still fairly enormous. Currently NPK requirement in the domestic market is estimated at about 9.2 million tonnes, while the production capacity of Indonesian fertilizer producers is only 6.3 million tonnes, including private sector about 3 million tonnes.
He is optimistic that fertilizer and petrochemical industry will have good prospects in the future and the domestic fertilizer demand, especially NPK will continue to increase. Currently Pupuk Indonesia Group has a NPK factory with a capacity of 3.1 million tons per year and will be doubled until 2021, Idat said.
NPK development is a priority of Pupuk Indonesia in the future because the composition of NPK fertilizer is more complete than Urea. NPK is much more useful to farmers.
In addition, Pupuk Indonesia will also start penetrating other petrochemical business which has higher added value than urea. Currently the company is exploring the possibility of developing petrochemical products in Bintuni such as methanol, ethylene, and so forth.
Last year, Pupuk Indonesia has signed a Head of Agreement for Coal downstream projects with publicly listed coal producer PT Bukit Asam Tbk (IDX: PTBA), state-owned energy firm PT Pertamina and private firm PT Chandra Asri Petrochemical Tbk (IDX: TPIA).
Coal from Bukit Asam will be converted through gasification technology into final product which has higher selling value. This gasification technology enables converting young coal into syngas which is the raw material for further processing into Dimethyl Ether as fuel, urea as a fertilizer, and Polypropylene as a plastic raw material.
Idat said through this cooperation, the fertilizer industry hopes to utilize coal as a substitute for gas and raw materials of urea fertilizer. Meanwhile, President Director of Chandra Asri Erwin Ciputra added this coal-based polypropylene can help Indonesia in fulfilling the needs of domestic Polypropylene.
Currently, the production of Polypropylene has not been sufficient for domestic needs so that this cooperation will reduce the imports that the number is still large and continues to increase, he added.
Last year, the local producer successfully distributed 11.49 million tons of fertilizer, of which 9.3 million tons of fertilizer for Public Service Obligation and non-subsidized sector reached 2.19 million tons. In 2017, the state-owned fertilizer company recorded a profit of Rp3.08 trillion with total revenues of Rp58.96 trillion.
Pupuk Indonesia is the largest fertilizer and other petrochemicals producer in Southeast Asia, where as much as 100 percent owned by the Indonesian government.