Cap And Michelin To Build Synthetic Rubber Factory In Cilegon

Jakarta, Nov 6 (Antara) - PT Chandra Asri Petrochemical Tbk (CAP) and Compagnie Financiere Michelin (Michelin) have signed an agreement to build a synthetic rubber factory in Cilegon, in the province of Banten. PT Synthetic Rubber Indonesia (SRI), a joint venture company between Michelin and CAP`s subsidiary PT Petrokimia Butadiene Indonesia, will run the factory, CAP`s President Director, Erwin Ciputra said here on Tuesday. The project is an implementation of an agreement between PT Petrokimia Butadiene Indonesia and Michelin signed in June 2013, Erwin said. The signing ceremony on Tuesday was attended by French Ambassador to Indonesia Corinne Breuze and head of the investment board (BKPM) Mahendra Siregar. Corinne said the agreement is expected to contribute to strengthening the country`s automotive sector and business cooperation between the two companies. Mahendra said the government will support the project and hopes that the factory could start up as scheduled early 2017. The project is estimated to cost US$435 million with Michelin to hold a 55 percent stake and PT Petrokimia Butadiene Indonesia as 45 percent shareholder. General Managing Partner and CEO of the Michelin Group Jean Dominique Senard said the cooperation agreement showed Michelin`s long term commitment to do business in Indonesia. Jean said Michelin is known as a producer of environmentally friendly tires . He said the synthetic rubber factory to be built in Indonesia will be a capital intensive and high technology project, employing only highly skilled workers. "All workers would be first trained to be ready when the factory has been in operation," he said. He said fluctuation in the value of rupiah as are currencies in many other countries currency should not cause much concern as it a short term problem while the synthetic rubber factory is a long term project. Erwin Ciputra said construction of the factory is to start in 2015 to be completed in 2017. PT Synthetic Rubber Indonesia will produce "poly-butadiene rubber" with "neodymium catalyst" and "solution styrene butadiene rubber" with a capacity of 120,000 tons as feedstock for environmentally friendly tires, Erwin said. "This is in line with the growing demand for environmentally friendly tires in Indonesia as well as in the world," he said. He said PT Synthetic Rubber Indonesia is expected to have positive contribution to the country`s economy as it will reduce dependence on imports and increase the country`s tire production and exports. The entire basic material for the synthetic rubber factory will be supplied by PT Petrokimia Butadiene Indonesia. In order to secure butadiene, CAP will increase its production of ethylene, propylene, py-gas, mixed C4, and expand the production capacity of its naphtha cracker. Erwin said he hoped the synthetic rubber factory will strengthen the integrated petrochemical industry of CAP. Mahendra said Indonesia will need capital and high technology intensive and environmentally friendly industry , which is export oriented. He said the government will provide support for development of such industry to create a stable and sustainable economy.