East China-based Tongkun Group and Xinfengming Group are seeking Beijing’s approval to construct a US$10 billion refinery and petrochemical complex in North Kalimantan Province in Indonesia.
As reported by Reuters on Tuesday (11/4), the proposed investment which aims to produce feedstocks for chemical fiber, is targeted towards the Kalimantan Industrial Park Indonesia (KIPI), which is owned by Boy Thohir.
Led by Tongkun, the proposed petrochemical complex would include a refinery with a production capacity of 200,000 barrels-per-day, and an ethylene unit with a production capacity of 800,000 ton-per-year. This project however, may be expanded in the future.
The project would be a part of a planned industrial park in North Kalimantan where companies broke ground on a US$2.6 billion hydropower project last month to attract aluminum, battery, and EV manufacturers.
A Tongkun investor relations official said that the Indonesia refinery project is still at an early planning stage. Meanwhile, a Xinfengming investor relations official declined to comment.
China’s part of Belt and Road Initiative in Southeast Asia
The move comes as China ramps up talks on mega investments in Southeast Asia as part of President Xi Jinping’s Belt and Road Initiative, and as Beijing limits approvals for new domestic relations to cut carbon emissions and a fuel supply overhang.
According to a post dated Nov 18 on Tongkun’s official WeChat account, top executives of the two Chinese companies briefed Indonesian President Jokowi on their investment plans in North Kalimantan during the sidelines of the G20 summit in Bali. The post however, give little to no detail concerning the investment plan and project.
Indonesian Coordinating Minister for Maritime and Investment Affairs, Luhut Pandjaitan, met with NDRC Chairman Zheng Shanjie and Chinese Foreign Minister Qin Gang in Beijing last week to discuss Chinese investment in Indonesia. Luhut is hoping for more Chinese participation in the North Kalimantan industrial park, and in investment for renewable and new energy vehicles without mentioning specific projects.
During Jokowi’s visit to Beijing in July last year, Luhut and Foreign Minister Retno Marsudi held meetings with Tongkun and Xinfengming to encourage the development of a petrochemical chain in North Kalimantan.
The 13,000 hectares Indonesian Industrial Park in North Kalimantan itself will be divided into several clusters, such as the EV battery industry, petrochemical industry, and aluminum industry. The area receives electricity from hydroelectric power plants from the Mentarang River and Kayan River in North Kalimantan.
