As Lotte Group chairman Shin Dong-bin has returned to the forefront of management, Lotte Chemical's project to build a new petrochemical complex in Indonesia is expected to get into its stride.
The group is now set to promote overseas projects in earnest as Lotte Corp. has become the largest shareholder of Lotte Chemical Corp., a major cash cow. Lotte Corp. has recently decided to acquire a 23.24 percent stake, or 7,965,201 shares, in Lotte Chemical for 2.23 trillion won (US$1.98 billion). Lotte Corp. has bought the stakes in Lotte Chemical with short-term borrowing.
Lotte Chemical is expected to accelerate its overseas projects with Shin’s return to the office. Its 4 trillion won (US$3.56 billion) petrochemical project in Indonesia is the first one to be mentioned. Lotte Chemical held the first board meeting after Shin’s return on on Oct. 10 and discussed how to promote the Indonesian petrochemical project.
Lotte Chemical has been pushing ahead with the Indonesian petrochemical complex project, which includes a naphtha cracking center (NCC), in Cilegon, Banten Province, through Lotte Chemical Titan, a subsidiary in Malaysia acquired in 2010. The company accelerated the progress speed by buying the site of Indonesia’s state-run steel firm PT Krakatau Steel in Feb. last year but the project has been suspended after Shin Dong-bin was arrested for bribing ex-President Park Geun-hye. The Indonesian petrochemical complex project is considered a long-cherished wish driven by Shin since 2011.
In addition, some say that Lotte Chemical will secure capital by handing over the stakes owned by Lotte Property and Development Co. and Hotel Lotte Co. to Lotte Corp. for 67.47 billion won (US$60 million) and 58.9 billion won (US$52.38 million), respectively, and use it for the project.
An official from Lotte Chemical said, “Since the project costs trillions of won, the business plan has been reviewed. The judgment and decision of chief executive officers are still remained.”
When the project goes well, Lotte Chemical will be able to have large-scale facilities in Indonesia that can produce 1 million tons of ethylene, 700,000 tons of ethylene glycol, 140,000 tons of butadiene, 650,000 tons of polyethylene and 600,000 tons of polypro-pylene by 2023.