RI plans to develop $1.7b coal-based petrochemical industry

Indonesia plans to develop a US$1.7 billion coal-based petrochemical industry to produce propylene, a key raw material for the production of plastics, Investor Daily reported on Monday.

Deputy Chairman of the Indonesian Olefin and Plastic Industry Association (Inaplas) Budi Susanto Sadiman told the paper that the plan came amid concerns on the lack of domestic supply of raw materials for plastic production due to the limited capacity of the country?s fuel refineries.

He said that the country could no longer wait for the government to develop new fuel refineries, which require greater investment, amid soaring demand for plastic products at home. On the other hand, the country has huge reserves of coal, which could be transformed into gas to be later processed into propylene.

Budi said that the plan, which is joint cooperation among the State Ministry of Research and Technology, the Ministry of Industry, and national private companies, is to develop a coal-based petrochemical industry to be either located in Kalimantan or South Sumatra, two of the country?s key coal producing regions, with an annual production capacity of 400,000 tons.

He, however, said that the plan could only be realized after the country manages to take hold of the necessary technology, hopefully to occur in 2020. ?We already have the master plan, and hopefully the technology would be ready in 2020,? Budi said.

Indonesia, according to Budi, imports about 40 percent of its plastic raw material demand of around 4.2 million tons per year. (*)