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altim Pasifik Amoniak, a joint venture between two Japanese companies Mitsui & Co. Ltd. and Toyota Tsusho, agreed to transfer the company'€™s assets, which include an ammonia plant, to Pupuk Kalimantan Timur (Pupuk Kaltim) in line with its build, operate and transfer (BOT) contract with the state-owned fertilizer producer.

Pupuk Kaltim president director Aas Asikin Idat said in Jakarta Thursday that the transfer was earlier than expected as Kaltim Pasifik achieved the cash-flow target ahead of the initial schedule of 2018.

The transfer of the ammonia plant, worth around US$109 million, will increase Pupuk Kaltim'€™s ammonia fertilizer production capacity by 660,000 tons to 2.51 million tons a year, he said after the signing of the asset-transfer agreement with the Japanese companies.

At present, Pupuk Kaltim, a subsidiary of PT Pupuk Indonesia Holding Co. (Pupuk Indonesia), produces 2.98 million tons of urea fertilizer, 1.85 million tons of ammonia fertilizer and 350,000 tons of NPK fertilizer.

'€œWith the transfer of the Kaltim Pasifik Amoniak plant, we hope Pupuk Kaltim will increase feedstock for the domestic production of ammonia-based products,'€ Pupuk Indonesia president director Arifin Tasrif said during the same event.

Arifin added that with the asset transfer, he hopes Pupuk Indonesia '€” as the holding company of several state-owned fertilizer producers in the country including Pupuk Kaltim '€” will become a main player in the fertilizer industry in the Southeast-Asia region.

Mitsui & Co. Ltd. formerly owned a 75 percent stake in Kaltim Pasifik and Toyota Tsusho Japan held the other 25 percent.

At the same event, Pupuk Kaltim and Mitsui also signed an agreement stating that the latter would buy 60 percent of the ammonium plant'€™s production until 2025, according to Aas.

Kaltim Pasifik, established in 1997 under a BOT with Pupuk Kaltim, started operating the ammonia plant in 2000 in Pupuk Kaltim'€™s industrial estate in Bontang, East Kalimantan.

'€œKaltim Pasifik reached its target well before 2018, so we decided to do the transfer today,'€ Mitsui ammonia and sulphur division general manager Yasuhiro Kawasaki told The Jakarta Post.

Yasuhiro said that Kaltim Pasifik would explore other business opportunities in Indonesia following the transfer.

Earlier this year, Pupuk Kaltim signed a joint venture agreement with Jordanian mining firm Jordan Phosphate Mines Co. Plc to build four plants worth $300 million in Bontang to support Pupuk Indonesia'€™s long-term plan to build fertilizer industrial clusters in Java, Sumatra and Kalimantan. Each cluster would consist of phosphoric acid, sulfuric acid, urea, ammonium sulfate (ZA) and super-phosphate facilities.

Two of the plants will produce 200,000 tons of phosphoric acid and 600,000 tons of sulfuric acid each year. The others two are an aluminium fluoride plant, with an annual production capacity of 12,600 tons, and a gypsum granule plant, with a production capacity of 500,000 tons.

Initially, it had been targeted that construction of the four plants would start mid-year and be completed in three years. However, it seems the plans have been delayed.

'€œWe need to establish a JVC [joint venture company] before starting construction, but [the JVC] has not been established. We hope to start the construction of the plants by the year-end or early next year,'€ said Arifin.

Establishing a JVC and building a plant took time because of the licensing process, according to Pupuk Kaltim secretariat and public relations head Wijaya Laksana, thus, it was hard to predict an end date.

'€œAt the moment I am not able to predict when construction will start,'€ said Wijaya.

Based on the agreement, Pupuk Kaltim will control a majority share of 60 percent, while Jordan Phosphate will hold the remaining 40 percent. (dwa)