INDONESIA: Chandra starts expansion project next year

"We are going to modify the plant's machines and add more furnaces - for processing the oil derivative naphtha into plastic - to boost our overall production capacity,” Chandra Asri's investor relations head, Harry M. Tamin, said.

According to Chandra Asri director Suryandi, the plant's modification should boost the production capacity of its ethylene, propylene, mixed C4 and pyrolysis gasoline or pygas compounds.

Suryandi added that the company would increase its ethylene production to 860,000 tons per annum from the current 600,000 tons. It would also result in an increase of propylene production to 470,000 tons per year from 320,000 tons.

Meanwhile, the production of mixed C4 is expected to increase from 220,000 tons to 315,000 tons per year, while pygas will increase to 400,000 tons per annum from 280,000 tons.

Harry said that currently, Japan's Toyo Engineering Corp. was finalizing the engineering design for the plant's modification, which is expected to be completed by the third quarter of 2015 with operations beginning in early 2016.

"Once they finalize the engineering design, we will start planning our budget to buy the machinery,” he said.

He said that to procure the necessary machinery, the company would obtain funds from selling new shares and securing bank loans.

The company's shareholders approved the rights issue plan at an extraordinary general shareholders' meeting on Thursday (31 Oct. 2013).

The firm plans to use 81 percent of the estimated total $130 million in funds raised from the sale of shares, to cover some of the modification costs.

"We will try to secure approximately $275 million in loans from foreign banks to cover the remaining project expenses. We have submitted proposals to some banks, but they will only provide us with the loans after the rights issue,” Harry said.

He added that the company was aiming to have the funds in place by December to avoid disrupting the project timeline.

Source: Daily "The Jakarta Post", Jakarta; 1 Nov 2013(Syed Rashid Ali, karachi, Pakistan)