Indonesian Fertilizer Producing Giant Pupuk Kaltim Looks to Expand Operations

JAKARTA: PT Pupuk Kalimantan Timur (Pupuk Kaltim), Southeast Asia's leading urea fertilizer maker, has announced plans to invest at least $1 billion towards expanding its capacity and setting up a Soda ash plant. CEO Rahmad Pribadi stated the Indonesian state-controlled company is weighing their options for funding the expansion - either via an IPO or through borrowing. He added that Pupuk Kaltim has managed to accumulate cash from their profits over the past two years.

"With very high cash on hand, and our leverage (level) is very low, we have a lot of options," Rahmad stated.

"We have an expansion capacity, with certain debt-to-equity ratio, of around 40 trillion rupiah ($2.59 billion)," he stated.

Pupuk Kaltim, a state-owned enterprise, is expected to launch an initial public offering (IPO) this year with the aim of selling 20% of its stake for $500 million. According to Ministry officials in December and sources in January, the IPO could be decided by shareholders.

Pupuk Kaltim has made plans to expand their business by constructing a fertilizer factory in Fakfak, West Papua. The facility is projected to produce 660,000 tonnes of Ammonia and 1.2 million tonnes of urea, with an expected cost of over $1 billion. Construction is set to commence in the coming year, with operations predicted to start in 2027.

Pupuk Kaltim, one of the biggest producers of Ammonia, urea and NPK fertilizer in Asia-Pacific, has recently signed an initial sales agreement with Genting Oil & Gas, who operates the nearby Kasuri block. The agreement will provide the plant with Gas Feedstock from the Kasuri block.

In addition to this, the firm is set to build a 100,000 tonne NPK fertilizer plant in Bontang, East Kalimantan, where it is based. Currently it produces 2.7 million tonnes of Ammonia, 3.4 million tonnes of urea and 350,000 tonnes NPK fertilizer every year.

Pupuk Kaltim, a leading chemical manufacturer, is aiming to further diversify its operations and expand its market reach. The company recently announced plans to open a new Soda ash plant in Bontang. According to Rahmad, this new facility will produce 300,000 tonnes of Soda ash annually.

Last year witnessed an increase in Pupuk Kaltim's market share across the globe, especially within Australia and Latin America regions, due to the shortage of fertilizers caused by war in Ukraine. With the creation of this new Soda ash plant, the company intends to further deepen its presence in these markets and increase its overall growth.

"Because of the war, the attitude of all countries was protecting their self-interest. China, Russia didn't export, so there was a space left by players that usually exported to Australia," he stated.

"I can confidently say that nearly all of the space left by those players was filled by Pupuk Kaltim."