South Korea-based Honam Petrochemical will invest up to $5bn to set up a petrochemical complex in Indonesia in the first quarter of 2013, according to business development managing director Kim Gyo-Hyun.
"We anticipate that the construction will be completed by 2016, but the industry minister (MS Hidayat) expects it can be finished faster," Kim told the Jakarta Post.
Honam has entered into a memorandum of understanding with Krakatau Steel, which will provide 40ha of land out of the total of 60 needed to construct the compound in Cilegon, Banten.
Honam said it will continue the project's feasibility study and financing issues will be discussed at a later date.
The naphtha cracker and its downstream plants will source raw materials from local suppliers where possible, but will also import due to the limited domestic supply, according to Kim.
He said that about 80% of the output from the proposed complex will be used to cater to the local demand, leaving a small part for export.
As per the proposal, the new complex will produce one million tonnes per year (tpa) of ethylene, 550,000tpa of propylene, 600,000tpa of polyethylene, 700,000tpa of mono ethylene glycol, 600,000tpa of polypropylene and 140,000tpa of butadiene.
Polyolefin products such as polyethylene, propylene and polypropylene are raw materials which are used in plastic-based household products, including plastic bags, water cups, hoses and pipes.
Honam is 57.2% owned by the South Korean Lotte Group and has a combined production capacity of 2.5 million tpa from its plants in South Korea and Malaysia.
