Bakrie Brothers to make chemicals its core business
Bakrie Brothers to make chemicals its core business
JAKARTA (JP): Publicly listed PT Bakrie & Brothers, which is
now divesting in two mining companies, plans to invest more in
the chemical sector to make it a core area of its business.
Bakrie & Brothers' chief commissioner, Aburizal Bakrie, said
on Thursday the company would team up with Mitsubishi Chemical
Corp. of Japan to build a US$$700 million paraxylene plant in
Cilegon, West Java.
Bakrie would take an 80 percent stake in the venture and
Mitsubishi would take the rest.
"This way, we want to incorporate our strategic investment in
the chemical industry into our core businesses," Aburizal told
reporters at his office.
Bakrie & Brothers now has three core areas of business:
telecommunications, plantations and infrastructure-related
industries. It also has a number of "strategic" investments in
the chemical, mining and power generation sectors.
In chemicals, Bakrie holds a 20 percent stake in PT Bakrie
Kasei Corporation, 20 percent in PT Bakrie Kasei PET and 20
percent in PT Bakrie Diafoil.
Its partners in Bakrie Kasei Corp. include Mitsubishi Chemical
Corp., Japan Asia Investment Co., Ltd. and International Finance
Corporation. The three firms are also Bakrie's partners in Bakrie
Kasei PET, besides Toyobo Co.
In Bakrie Diafoil, Bakrie, through Bakrie Kasei, teamed up
with Diafoil Hoechst Co., Ltd.
The three chemical companies' production is integrated. Bakrie
Kasei Corp. supplies purified terephthalic acid (PTA) to Bakrie
Kasei PET, which uses PTA as raw material in producing
polyethylene terephthalate (PET) resin.
Bakrie Kasei PET, in turn, supplies PET resin to Bakrie
Diafoil to produce polyethylene film, which is used for a wide
range of packaging products. PET resin can be used to produce
bottling products.
Besides supplying companies in their own group, the three
companies sell to other companies.
The paraxylene project is expected to supply paraxylene to
several chemical companies in Cilegon, including those controlled
by Bakrie & Brothers. Paraxylene is used to produce PTA.
Too low
Bakrie & Brothers is divesting its stakes in the mining
sector, arguing that their returns are too low.
Bakrie has agreed to sell 49 percent or 10.5 million shares of
PT Indocopper Investama Corp., which owns 9.36 percent of PT
Freeport Indonesia, to the Nusamba Group for US$302.7 million.
It is also selling its 20 percent stake in the coal mining
firm PT Arutmin Indonesia and its coal marketing rights for a
total of US$100 million.
Aburizal said the proceeds from the mining divestments would
be used to strengthen the company's core businesses, especially
telecommunications.
In addition, Aburizal said, the company was committed to
increasing its investment in the chemical industry to strengthen
its market position.
The chemical industry had a bright future because of rising
demand for chemical products, and they had many derivative
products, Aburizal said.
When asked about tight competition from large chemical
companies, Aburizal asserted that Bakrie could survive it by
partnering reliable chemical companies and improving efficiency.
(rid)