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JAKARTA. Petroleum and chemical distributor AKR Corporindo says two foreign companies will soon move on to its industrial estate in Gresik, East Java, with deals expected to materialize before the end of this year.
AKR investor relations head Heri Akhyar said on Monday that the two big companies had expressed their interest in being the first occupants of the industrial estate, known as the Java Integrated Industrial and Post Estate (JIIPE).
Once the two foreign companies ink the deal, it will generate nearly US$20 million for AKR in exchange for around 100 to 150 hectares of land.
Heri refused to name the companies, simply saying that “both are foreign firms, with one specializing in the chemical industry looking to establish an alternative-energy facility.”
“The other is a mining company currently under pressure to build a copper smelter,” he told reporters.
“The smelter will be a joint venture with a state-owned firm,” Heri said, declining to elaborate further.
Following the mineral ore export ban on Jan. 12, 2014 as stipulated in the 2009 Mining Law, foreign copper giants — such as US-based Freeport-McMoRan Copper & Gold Inc. and Newmont Nusa Tenggara — are required to process ore before export.
Despite the ban, the government still allows mining companies to export semi-finished minerals, including concentrates, until 2017 as long as they show commitment to developing smelters.
Freeport is currently conducting a feasibility study with state-run miner Aneka Tambang (Antam) to build a smelter, which will be located either in Papua or East Java. This raises speculation that the US miner may be one of the potential buyers for the industrial estate, which is now under construction.
Heri said that once the two companies had officially confirmed their entry into JIIPE, AKR would build a 2x300 megawatt power plant to support the activities of the companies. The power plant, he said, would be operated by a Thailand-based company, in which AKR had a majority ownership.
The first-phase of JIIPE construction, about 800 hectares of a total 1,760 hectares of the estate, would be finalized by October and has been offered to interested businesses. The whole estate is expected to be finished by 2023.
Heri said that AKR targets to market about 100 hectares this year, outside the plots offered to the two aforementioned companies, and expected to sell the remaining in three years.
The land costs about $120 to $150 per hectare.
AKR has teamed up with state-owned port operator PT Pelabuhan Indonesia III (Pelindo III) for the construction of the integrated industrial estate, having formed two joint ventures to carry out the project.
For the port, AKR, through its subsidiary, PT Usaha Era Pratama Nusantara (UEPN), formed PT Berkah Manyar Sejahtera, in which UEPN and Pelindo hold 40 percent and 60 percent stakes, respectively.
Meanwhile, for the industrial estate, UEPN and Pelindo set up PT Berkah Kawasan Manyar Sejahtera. In the second joint venture, UEPN holds 60 percent ownership, while Pelindo controls the remaining 40 percent.
The company claims JIIPE is the first of its kind as it would have a deep port built on another 371 hectares of land as well as an industrial estate with railway and toll road connections.
“We are not a property developer. We are not in a hurry,” Heri said, adding that the contribution of JIIPE service income might surpass that of petroleum distribution, which AKR heavily relied on, from about five years from now on.
Heri said AKR aimed to reap Rp 27 trillion ($2.34 billion) in sales and revenue this year, about a 20 percent increase compared to Rp 22.34 trillion last year.
Out of the total targeted figure, Rp 22 trillion will be from petroleum distribution and the remainder will be from its chemical business.
AKR reported about 3.5 percent year-on-year to Rp 5.63 trillion in sales and revenue during the first quarter of this year, while its after-tax profit rose by about 15.4 percent to Rp 173.8 billion. (Anggi M. Lubis)
