By Gayatri Suroyo and Fransiska Nangoy
JAKARTA (Reuters) – Southeast Asia’s biggest urea fertiliser maker PT Pupuk Kalimantan Timur (Pupuk Kaltim) plans to invest at least $1 billion to increase its capacity and set up a soda ash plant, its chief executive said on Friday.
The Indonesian state-controlled company is considering funding the expansion by launching an initial public offering (IPO) or borrowing, though chief executive Rahmad Pribadi said Pupuk Kaltim also has accumulated cash from the previous two years’ profits.
“With very high cash on hand, and our leverage (level) is very low, we have a lot of options,” Rahmad said in an interview, underlining the expansion plans were not contingent on the IPO.
“We have an expansion capacity, with certain debt-to-equity ratio, of around 40 trillion rupiah ($2.59 billion),” he said.
State-Owned Enterprise Ministry officials in December told parliament that Pupuk Kaltim is among the state companies that would launch an IPO this year and sources told Reuters in January it aims to sell a 20% stake at the offering to raise $500 million.
Rahmad said an IPO would be decided by shareholders.
Pupuk Kaltim’s expansion plans include building a fertiliser factory to produce 660,000 tonnes of ammonia and 1.2 million tonnes of urea in Fakfak, West Papua, likely to cost over $1 billion, Rahmad said.
It hopes to start construction next year with an operational date estimated for 2027, he said.
The plant would get gas feedstock from nearby Kasuri block operated by Malaysia’s Genting Oil & Gas, he said. The two companies signed an initial sales agreement last month.
Pupuk Kaltim would also build a 100,000 tonne NPK fertiliser plant in Bontang, East Kalimantan, where it is based, he said.
The firm currently makes 2.7 million tonnes of ammonia, 3.4 million tonnes of urea and 350,000 tonnes NPK fertiliser per year, making it among the Asia-Pacific’s biggest producers.
Seeking to diversify, Pupuk Kaltim will also develop a plant that makes 300,000 tonnes of soda ash in Bontang, Rahmad said.
The company gained market shares last year in the region, especially Australia, plus Latin America, he said, following a global fertiliser shortage due to the war in Ukraine. It aims to expand into those markets further.
“Because of the war, the attitude of all countries were protecting their self interest. China, Russia didn’t export, so there was a space left by players that usually exported to Australia,” he said.
“I can confidently say that nearly all of the space left by those players was filled by Pupuk Kaltim.”
($1 = 15,445.0000 rupiah)
(Reporting by Gayatri Suroyo, Fransiska Nangoy; Editing by Martin Petty)
