Lotte Chemical Corp. announced that its board approved capital expenditure for its planned integrated petrochemical facility (IPF) in Cilegon, Indonesia.
Lotte Chemical said in a disclosure that its board approved a recapitalization scheme of 1.4 trillion won ($1.2 billion) through purchase of rights offering from Indonesia, PT Lotte Chemical Indonesia, to fund a massive petrochemical complex project dubbed “Lotte Chemical Indonesia New Ethylene (LINE) Project” in the Southeast Asian country.
According to the recapitalization plan, PT Lotte Chemical Indonesia will issue new shares worth 1.4 trillion won ($1.2 billion), of which Lotte Chemical and its affiliate Lotte Chemical Titan Holding Berhad will respectively take up 702.2 billion won ($600 million) and 730.9 billion won ($630 million) worth.
The new capital will go to LINE Project aimed to build a massive petrochemical complex in Indonesia that produces ethylene, one of the core source materials for various petrochemical products.
Lotte Chemical will build a naphtha cracker facility with an annual ethylene production capacity of 1 million tons under a plan to vertically integrate the facility with its exiting polyethylene plant.
The Korean chemical giant expected that it would be able to raise $2.06 billion in annual sales by producing 1 million tons of ethylene at its petrochemical complex in Indonesia and 520,000 tons of propylene, and 250,000 tons of polypropylene. It estimated the project’s total cost at 4.4 trillion won ($3.77 billion) with an aim to complete the project by 2025 after commencing it this year.
The project is expected to add a polyethylene (PE) plant and a tertiary butyl alcohol (TBA) plant – to the IPF, thereby raising the project’s total cost.
Lotte Chemical is pursuing the ambitious project despite concerns over the prolonged Covid-19 pandemic to enhance its market dominance in Southeast Asia where demand for petrochemical products is set to rise on the anticipated economic growth.