KUALA LUMPUR (March 21): A unit of Lotte Chemical Titan Holding Bhd (LCT) has entered into a loan facility of US$2.4 billion (RM10.58 billion) with the Export-Import Bank of Korea, Korea Trade Insurance Corporation and other commercial banks to fund the development works of an integrated petrochemical facility in Indonesia.

In a filing to Bursa Malaysia on Tuesday (March 21), LCT said its subsidiary PT LOTTE Chemical Indonesia (LCI) secured the 12-year term loan for a project known as the Lotte Indonesia New Ethylene (LINE) project.

LCT holds an effective equity interest of 51% in LCI, the owner of the LINE project, while LOTTE Chemical Corp (LCC) holds the remaining 49% and is also the guarantor of the loan facility.

LCT president and chief executive officer Park Hyun Chul said the construction of the LINE project commenced in January 2022, and it is slated for completion in 2025.

“As at Jan 6, 2023, LCC and LCT had completed their portion of equity injection of US$1.6 billion into LCI, representing 40% of the capital structure. The completion of the loan facility for the LINE project marked an important milestone with the finalisation of the remaining capital funding for the project," he said in a separate statement.

He added the LINE project serves as a key strategic expansion for the group to solidify LCT’s position as a top-tier petrochemical company in Southeast Asia.

“The project also provides synergistic advantages to the group’s three existing standalone polyethylene plants which are in the vicinity of the project by reducing feedstock transportation and logistics costs as well as higher operational and cost efficiencies,” added Park.

The LINE project includes the development of a cracker plant that will use naphtha and liquefied petroleum gas as its feedstock to produce, among others, 1,000 kilo tonnes per annum (KTA) of ethylene and 520 KTA of propylene.

Upon completion, the production capacity of the group will increase by 65% to 5,878 KTA from its existing production capacity of 3,568 KTA.

“As Indonesia is a net importer of petrochemical products, the project will enable us to capitalise on the anticipated increase in demand for our products in the country,” said Park.

Shares of LCT closed 0.77% or one sen lower to RM1.29, giving the company a market capitalisation of RM2.98 billion.