Bakrie tightens grip in petrochemicals

CILEGON, West Java: PT Bakrie Kasei Corporation, an Indonesian-Japanese joint venture, yesterday started the expansion of its purified terephthalic acid (PTA) mill and the construction of a polyethylene terephthalate (PET) resin plant.

Government confident and tycoon Aburizal Bakrie, chief commissioner of the company, told newsmen here that the expansion of the PTA plant and the establishment of the new PET plant will need a total investment of US$282 million.

The expansion project, that will cost $202 million, will double the company's PTA production capacity from 250,000 tons per annum to 500,000 tons in 1996.

PTA is a raw material for the production of polyester fiber and tire cords.

The joint venture established the PTA plant in 1992 with an investment of $329 million.

"We will become the biggest PTA producer in Southeast Asia after the completion of the expansion project," said Aburizal, who is fondly referred to as "Ical".

Aburizal, also chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said the PTA industry does not receive any protection from the government.

Besides the joint venture, PTA is also produced by the state oil company Pertamina at its 225,000-ton-capacity plant in Palembang, South Sumatra.

Aburizal said he is optimistic that the country's annual demand for PTA will steadily increase from 335,500 tons estimated for this year to 375,000 tons next year and to one million tons by the year 2000.

The price of PTA increased by 44.5 percent to $657 per ton last year.

The PTA plant is 56 percent owned by Mitsubishi Kasei Corporation of Japan, 15 percent by Bakrie & Brothers, 10 percent by the International Finance Corporation, an affiliate of the World Bank, and 19 percent by Japan Asia Investment Company.

PET

Aburizal said the PET resin plant, that will be built within four years with an investment of $80 million, will have a designed capacity of 40,000 tons per year.

PET resin is a raw material for the production of plastic packaging and textile fibers.

Aburizal said his PET resin project has good prospects because it will be the first of its kind in Indonesia.

He said demand for PET resin was estimated at 50,440 tons last year.

The PET resin project is equally owned by Mitsubishi Kasei, Bakrie & Brothers, Toyobo Corporation of Japan, the International Finance Corporation and Japan Asia Investment.

Aburizal said the joint venture is expected to recover the costs of expansion and new projects within seven years. (04)