Petrokimia, Jordan plan two chemical factories

Novia D. Rulistia ,  The Jakarta Pot ,  Jakarta   |  Sat, 07/19/2008 11:02 AM  |  Business

State fertilizer producer PT Petrokimia Gresik and Jordan Phosphate Mines Co.Ltd. have signed a joint venture to construct two chemicals factories in Gresik, East Java, to boost domestic supply.

Petrokimia president director Arifin Tasrif said Friday the factories would cost a total of US$197 million and that construction was expected to begin in June 2009 and take 30 months.

The two factories will produce 200,000 tons of phosphoric acid and 600,000 tons of sulfuric acid per year.

He said Petrokimia was the only producer in Indonesia of phosphate-based fertilizer and nitrogenous phosphorus potassium (NPK), and that the company was forced to import an average of 100,000 tons of raw materials every year to meet demand.

"We need to make sure that we have enough raw materials to fulfill the increasing demand for fertilizer," he said Friday after signing the agreement with Jordan's president director Walid Kurdi.

Data from the Association of Indonesian Fertilizer Producers shows domestic demand for fertilizer reached 7.94 million tons last year, up from 7.64 million tons in 2006, 7.22 million tons in 2005 and 7.09 million tons in 2004.

Arifin said Jordan would supply 680,000 tons of phosphate rocks to the factories annually, and that his company would refine it into fertilizer products.

Arifin said the company also aimed to increase its production capacity of NPK by 42 percent to 1.7 million tons per year by 2010 from the current 1.19 million tons.

To finance the project, both companies will contribute 30 percent of the spending, or equal to $30 million each, while the remaining 70 percent will come from loans, he said.

"We're now in talks with several local and foreign banks. In addition, we will also acquire funding from international financing institutions, including the Islamic Development Bank," he said.

Each company will hold a 50 percent ownership of the upcoming project, he said.

In addition to NPK, Petrokimia also produces SP-36 fertilizer, ZA, and urea; annually outputting one million tons, 650,000 tons and 460,000 tons of the raw materials, respectively.

The company also plans to build an urea and ammonia factory in Gresik worth Rp 5.7 trillion to fulfill domestic demand, especially in East Java.

"That factory will be the second phase of our strategy to increase our total capacity in the next five years," he said.

Arifin said the factory was expected to produce 2,000 tons of ammonia and 1,700 tons of urea per day.

"We're now waiting for the government to approve the plan, so that we can then immediately start construction," he said.

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