Lotte Chemical plans to build $3.9bn chemical plant in Indonesia

The plant will be built on the coast of Banten, Java’s westernmost province (Willy Hanafi/CC BY 2.0)
Subsidiaries of South Korea’s Lotte Chemical Corporationon Friday announced the award of contracts worth $757.2m to begin building a $3.9bn petrochemical complex in Indonesia.

The Lotte Chemical Indonesia New Ethylene project (LINE) will be located in Merak, Banten Province, western Java.

The contract for the Group A work package was to be awarded to a joint venture between South Korea’s Hyundai Engineering Co. and Indonesia’s PT Hans Enjiniring dan Konstruksi, while an offshore engineering and procurement contract goes to Hyundai.

The Group A package involves building a cracker plant with the capacity to produce, amongst others, 1,000 kilometric tonnes per annum (“KTA”) of ethylene and 520 KTA of propylene.

In a 7 January press release, Park Hyun Chul, chief executive of subsidiary Lotte Chemical Titan Holding, said: “With the latest development, all the pivotal aspects of the construction of the Indonesia LINE Project (i.e. the Cracker, downstream plants, infrastructure facilities and etc.) are now in place and we are set to commence the full project construction this year and the project will be slated for completion by 2025.”

In return for the investment, the Indonesian government has agreed to allow Lotte a number of tax concessions, including a lower tariff on its products.

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