Indonesia: Synthetic Rubber Chandra Asri and Michelin Jointly Produce Synthetic Rubber for Indonesian Tire Market

PT Synthetic Rubber Indonesia (SRI), the first synthetic rubber factory that produces Polybutadiene Rubber and Solution Styrene Butadiene Rubber in Indonesia, has been officially inaugurated.

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Cilegon/Indonesia — The factory celebration was attended by the Minister of Industry of the Republic of Indonesia, Airlangga Hartarto and witnessed by the Minister of State, attached to the Minister for Europe and Foreign Affairs of the French Republic, Jean-Baptiste Lemoyne.

The presence of SRI is intended to strengthen the manufacturing sector by producing value added products, combining Chandra Asri’s raw material products and Michelin’s technology that changes these raw materials into semifinished products used in the key components to produce environmentally friendly tires.

SRI is a joint venture between Michelin and PT Chandra Asri Petrochemical Tbk. established on June 17, 2013 with share ownership of 55 % and 45 % respectively. The investment value of the collaboration reached $ 435 million. The JV has benefited from a tax holiday incentive by the Indonesian government.

The start of production from SRI in August is also in line with the Government's strategy to grow State revenues by enhancing domestic manufacturing and national exports. Based on data retrieved from the Ministry of Industry, Indonesia's exports and imports continue to increase every year. In Q3 2018, exports reached $ 97.52 billion from $ 92.25 billion or increased by 5.71 % from the same period last year. During this period, export of industrial product contributed 72.24 % from total national export reaching $ 134.99 billion.

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Minister of Industry Airlangga Hartarto explained that the goal of the national industry is to produce more value-added products. One of the efforts is to encourage national industry competitiveness through continuous technological innovation. According to Minister of Industry, further development of synthetic rubber industry is deemed to be important to meet the growing demand of industrial sector. Synthetic rubber can be used in tire production, conveyor belts, rubber components, footwear, and insulated electric cable. Synthetic rubber enjoys robust demand from the domestic market in Indonesia which reaches 230,000 tons, while the current production capacity only reached 75.000 tons. Thus, current demand needs to be fulfilled through imports.

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Michelin Group General Managing Partner, Florent Menegaux stated that Michelin's collaboration with Chandra Asri is a strategic step in supporting the realization of a sustainable business. The desire to meet the high global demand for tires has driven the need for more synthetic rubber production. This is a major factor in why Michelin chose to build its third synthetic rubber plant in Indonesia after the ones in France and the United States.

SRI targets a production capacity of 120,000 tons per year of Polybutadiene Rubber and Solution Styrene Butadiene Rubber. The plant is flexible and can vary the mix to meets specific business needs. In order to meet its manufacturing standard, the French group also provided training and support to SRI experts from Indonesia so they could develop local competencies while supporting the development of national competitiveness.

Chandra Asri is the largest Indonesian petrochemical company which is believed to be the backbone of developing industries in the country. This year, Chandra Asri supplied 30 % of domestic petrochemical demand.

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