South Korea's Honam Petrochemical is considering investing $5 billion to build a steam cracker-based petrochemical complex in Indonesia to expand its Southeast Asian business, a company official told Platts Friday.
But he added that the company has not made a final investment decision on the complex and is hoping the Indonesian government will provide tax breaks and other benefits such as land for the project.
"If we are given tax benefits and land, we can start construction early next year," said the official, adding that the company was aiming to bring the complex online by 2016.
On the cards is a steam cracker with a capacity to produce 1 million mt/year of ethylene and 550,000 mt/year of propylene, said the official who declined to be named. The complex will also comprise a 600,000 mt/year polyethylene unit, a 700,000 mt/year monoethylene glycol unit, a 600,000 mt/year polypropylene unit and a 140,000 mt/year butadiene unit, he said.
Meanwhile, the official said the company has not signed a memorandum of understanding with Indonesia's state-owned Krakatau Steel for the provision of 40 hectares of land for the complex, refuting earlier media reports in Indonesia.
When announcing its 2011 earnings earlier this week, Honam said its board of directors had approved plans to build a petrochemical plant in Indonesia and will set up a subsidiary, Lotte Titan Indonesia, to manage it. No further details were provided.
The project was first mooted in February 2011, when Lotte Group chairman Shin Dong-Bin met Indonesian President Susilo Bambang Yudhoyono in Jakarta. Lotte holds a 57% stake in Honam.
Honam is South Korea second-largest ethylene maker with a production capacity of 1.75 million mt/year. In a bid to tap the Southeast Asian market, the company in July 2010, acquired a 100% stake in Malaysia's biggest chemicals maker Titan Chemicals for $950 million. .
Lotte has said it plans to expand the production capacity of Titan Chemicals without elaborating. Titan Chemicals currently has a capacity to produce 720,000 mt/year of ethylene and 480,000 mt/year of propylene, among others.
