Corporate News in Brief

ASTRA AGRO TO BUILD PALM OIL FACTORIES. PT Astra Agro Lestari Tbk has set aside Rp 1.2 trillion in capital spending this year. The fund will be used to finance business expansion to cultivate new land and build two new palm oil factories. Astra Agro Lestari President Widya Wiryawan said cultivation of new land will cover only 4 hectares this year. He said the company will distribute dividend 65% or Rp1.07 trillion of its net profit of Rp 1.66 trillion in 2009. He said the two factories will be built near its plantation in East Kalimantan and Sulawesi. The two factories will have a total processing capacity of 75 tons of fresh fruit bunches per hour. The one built in East Kalimantan is already completed and ready to start operation with a processing capacity of 45 tons an hour. The company also plans to build three or four crude palm oil storage tanks near sea ports to cost around Rp8 billion per tank .

DIVERSIFICATION OF BUSINESS OF PUPUK KALTIM TO COST US$ 1.4 BILLION. PT Pupuk Kalimantan Timur (PKT) is diversifying its business starting last year with an investment of US$ 1.4 billion or around Rp 15.65 trillion. Based on its 2010 plan, PKT will build supporting facilities for its Kaltim V urea factory in the form of coal boiler at a cost of US$ 110 million. The boiler will convert coal steam into gas totaling 27 million Btu (British thermal unit). The boiler could produce up to 440 tons superheated steam an hour functioning to propel the turbine in the process of producing ammonia and urea. Currently four urea factories of PKT are moved with natural gas averaging 30 million Btu per ton of urea. Under its diversification plan, PKT will build oil palm plantation integrated with an oleo-chemical factory in long term. The project will cost around Rp 3 trillion. In the plan, PKT will team up with state plantation company PT Perkebunan Nusantara XIII (Persero) by establishing a joint venture named PT Kalimantan Agro Nusantara (Kalianusa). This company will oversee all business in upstream and downstream palm oil industry. PKT is also set to carry out plan to build five factories producing NPK (nitrogen-phosphate-kalium) with an annual production capacity of 1 million tons per year. The project estimated to cost US$ 350 million is to be completed in 2014.

LENZING AG TO INVEST US$150 MILLION IN VISCOSE RAYON PROJECT. The Lenzing AG Group from Austria will make Indonesia as its production base for viscose fiber, the largest in the world outside Austria after the operation of its fourth factory in Purwakarta, West Java. Lenzing has invested US$ 150 million in PT South Pacific Viscose Indonesia (SPV), a subsidiary operating in the country since 1982. The expansion factory is the largest project in investment by Lenzing in the world in the past several years. The factory to produce viscose fiber for textiles and non woven fabrics is equipped with supporting facilities including a 12-megawatt power plant, a sulfuric acid plant with a capacity of 300 tons per day and a carbon disulfide (CS2) factory using environmentally friendly feedstock natural gas. The new factory has the capacity to produce 60,000 tons of viscose fiber per year bringing the SPV's total capacity to 220,000 tons per year, making it the largest viscose fiber producer in Asia and the second largest in the world after its parent company Lenzing, which has a capacity of 255,000 tons per year.

ENERGI MEGA TO SPEND US$ 81 MILLION ON TANKER PROCUREMENT. PT Energi Mega Persada Tbk, oil and natural gas producer will spend US$81 million to lease floating, production, storage, and offloading (FPSO) tanker from PT Berlian Laju Tanker Tbk for 4 years. President of Energi Mega Imam P. Agustino said the leasing of the facility is aimed at facilitating oil production from the Pagerungan Utara gas field in the PSC Kangean Block in East Java expected to come on stream in October 2010. In the Kangean Block, Energi Mega Persada has a 50% stake. Other shareholders include Mitsubishi Corporation and Japan Petroleum Exploration CO. Ltd, each holding a 25% stake. The Pagerungan Utara gas field is expected to produce 5,000 barrels to 7,000 barrels of crude oil per day.

INDOCEMENT RAISES BUDGET FOR CAPITAL SPENDING. The country's second largest cement producer PT Indocement Tunggal Prakarsa Tbk has decided to increase its capital spending to US$ 100 million this year, from US$ 70 million set earlier. Indocement's finance director Christian Kartawijaya said the company plans to build cement mill in Cirebon to increase its production capacity by 1.5 million. The expansion unit is to be operational this year. Indocement also plans to start construction of two more cement mills in Citeureup with a capacity of 2 million tons. The two mills will be operational in 2012. The additional capacity will bring the company's total production capacity from 17.1 million tons to 18.6 million tons in 2012. Currently the company operates at 75% of its capacity, Christian said. The company reported it secured a loan commitment of US$ 50 million.

JAPANESE ELECTRONIC GIANTS MOVE OPERATIONS TO INDONESIA. Japanese electronics giants Panasonic, Sanyo, and Toshiba have increased investment in their operations in Indonesia to take advantage of the huge domestic market, an official said. Budi Darmadi, the Industry Ministry's director general of transportation, said Panasonic's Indonesian unit PT Panasonic Gobel Energy Indonesia, which produces lithium batteries, plans to spend an additional US$ 60 million to ramp up manufacturing Budi said Sanyo had spent US$ 38 million to establish a factory in Cibitung outside Jakarta that produces components for compact disc readers. PT Sanyo Indonesia Company, a local unit of Sanyo, has increased its capital spending by US$ 50 million to produce more refrigerators. Toshiba has relocated its DVD factory from Vietnam to Indonesia. The Electronics Marketer Club said with domestic sales of consumer electronics expected to surge 20% this year, electronics giants are either expanding production here or considering such a move. EMC said electronics sales were forecast to reach Rp 24 trillion (US$2.5 billion) this year, up from Rp 20 trillion in 2009. Meanwhile, China's Changhong has increase investment in the country and South Korean electronics giant LG Electronics was reported considering making Indonesia its manufacturing hub for Southeast Asia.