French tire maker Michelin that Compagnie Financière Groupe has reached a deal with a subsidiary of PT Chandra Asri Petrochemical Jakarta-listed US $ 435 million to build a synthetic rubber plant.
The two entities said Monday that it had signed an agreement to a joint venture that would be 55 percent owned by Michelin and 45 percent by Chandra Asri subsidiary subsidiary, PT Petrokimia butadiene Indonesia (PBI).
Construction of the synthetic rubber plant is expected to be launched in early 2015 and completed within two years.
"This joint venture is clearly important to the [Michelin] group strategic goal — diversified growth — in particular emerging areas. The growth of our business means we have to pay special attention to the security of the community, in particular synthetic rubber, "a spokesman for Michelin told The Jakarta Post, adding that Indonesia's growing sector automobile company to strike a deal at last with PBI had lured.
Located in Clermont-Ferrand, Michelin now active in more than 170 countries. The company has faced business setbacks recently after the ongoing economic crisis in his home continent, Europe, whose car market is likely to fall for the sixth consecutive year.
Indonesia, have included 1.1 million vehicle sales last year sold 497,670 cars in the first five months of this year, an increase of 15 percent from the same period last year. Higher sales of cars will create higher demand for tyres accordingly.
Recent approval by the Government incentives for domestically produced, cheap, green cars will probably be the car sales this year, but at the same time the Government is also planning to subsidized fuel prices, which could curb people purchasing power.
PBI is currently developing the country first butadiene plant in Cilegon, Banten. The plant, which is expected to begin production next month, will have an annual total production capacity of 100,000 tons of butadiene, which is used to materials such as styrene butadiene rubber (SBR) in tire production, acrylonitrile butadiene system (ABS) and styrene butadiene latex (SBL).
"The synthetic rubber plant, which will use of materials that are manufactured on the PBI butadiene plant, expected to be built in the neighborhood," Chandra Asri Director and Secretary Suryandi said, albeit declining to reveal how his company planned to finance the joint venture.
The PBI butadiene plant would sell most of its products overseas, according to Suryandi, as it would only supply the products to the synthetic rubber plant in 2017, when the building of the plant was completed.
Apart from its collaboration with Chandra Asri Michelin has an investment in one of the country band manufacturers, PT Gajah Tunggal, which is listed on the Indonesia Stock Exchange (IDX) of the GJTL under the code. Michelin has a 10 percent stake in GJTL held since 2004.
Michelin and GJTL also signed a cooperation agreement in 2004, focuses on the production of passenger car tires for Michelin markets outside Indonesia and distribution in the country.
Shares in Chandra Asri, traded under the code TPIA, were unchanged at Rp 2,775 on Monday.
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