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Lotte Chemical to Invest Up to $4 Billion in Indonesia
Aggressive Investment
Lotte Chemical to Invest Up to $4 Billion in Indonesia
  • By Jung Min-hee
  • July 6, 2017, 04:15
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A view of Lotte Chemical’s ethylene plant in Yeosu.
A view of Lotte Chemical’s ethylene plant in Yeosu.

 

Lotte Group has been making a lavish investment in the petrochemical sector. After Chairman Shin Dong-bin has secured the management control over the group, he has expanded investments in the chemical business sector.

In fact, Lotte spent 3 trillion won (US$2.6 billion) in acquiring Samsung SDI’s chemical business unit (current Lotte Advanced Materials), Samsung Fine Chemicals (current Lotte Fine Chemical) and Samsung BP Chemicals (current Lotte BP Chemical) last year and established a joint venture with Italy’s state-run oil company Versalis under the name of Lotte Versalis Elastomers in 2013. The group also completed the construction of the Surgil Gas Chemical Complex in Uzbekistan worth 4.3 trillion won (US$3.72 billion) in 2015 and has begun commercial production. Currently, it is investing 3 trillion won (US$2.6 billion) to build a shale gas-based ethane cracking center (ECC) in Louisiana, the U.S. Lotte Group has spent more than 10 trillion won (US$8.66 billion) in these projects.

Moreover, it will invest up to US$4 billion (4.62 trillion won) in expanding the naphtha cracking center (NCC) of Lotte Chemical Titan in Malaysia. Indonesia’s Industry Minister Airlangga Hartarto, who visited South Korea on July 4, had a meeting with Chairman Shin and then up a post on Facebook, saying, “Lotte Chemical Titan showed its interest in making investments of US$3 to 4 billion (3.46 trillion to 4.62 trillion won) investments. Lotte Chemical has planned to expand the NCC with an annual production capacity of 2 million tons.”

The industry has mentioned that Lotte will expand the NCC in Indonesia but it is the first time to talk about the amount of investment and production capacity. Lotte Chemical took over Malaysia- based petrochemical producer Titan in 2010 and is now seeking to list the company in the local exchange market. Titan owns the NCC plant in Indonesia.

Lotte Group tried to buy U.S.-based petrochemical company Axiall Corp. last year but had to give up its bid due to the prosecution investigation related to the Choi Soon-sil Gate. This year, the group took part in a bid to take over Singapore’s petrochemical company Jurong Aromatics Corp. (JAC) but failed to win the deal owing to a lack of funds compared to its competitors.

In addition to the NCC investment in Indonesia, Lotte Group has announced its plans for expansion several times this year. The group is expanding the ethylene plant in Yeosu to increase its production capacity of ethylene by 200,000 tons and propylene by 100,000 tons. It is also expanding Lotte Fine Chemical’s methyl cellulose plant in Ulsan.