Jakarta (ANTARA News) - PT Chandra Asri Petrochemical Tbk (CAP) through its sister company, PT Petrokimia Butadiene Indonesia, will build the first butadiene factory in Indonesia.

For this purpose, the company appointed Toyo Engineering Korea Ltd as a contractor which had passed successfully the process of tender on May 27, 2011, the director of PT. Petrokimia Butadiene Indonesia, Suhat Miyarso said here on Thursday.

Butadiene is a combined raw material to produce synthetic rubber for tire and plastic-related automative components.

The appointment of Toyo Engeering Korea Ltd as the contractor practically  marks an immediate construction of butadiene factory in Indonesia.

According to him, the Toyo Engineering Korea Ltd company submitted the best bidding prices among other three bidders from Korea and Italy.

The bidders which participated in the tender of butadiene factory construction were those who ever built such similar factories in other countries and had been granted with licenses from BASF. Of the whole criteria, Toyo Engineering Korea Ltd was named the winner, Suhat said.

Marked with the laying of ground breaking stone, the construction will be started in July this year on a 40,000 meters squire land still within the complex of the PT. Chandra Astri Petrochemical in Cilegon, Banten province.

Furthermore, Suhat said the construction work could be expectedly completed in 23 months under EPC contract (Engineering, Procurement and Construction). Hopefully, this first butadiene factory in Indonesia will come into commercial operation in May, 2013.

The total value of investment for the factory construction may reach USD110 million with a planned production capacity of about 100,000 tons per years.

He further stressed that most of the factory's products would be used to meet domestic and export demands by applying such a license from BASF. The raw material for the production of butadiene like cruder C4 would be mostly supplied by PT. Chandra Asri Petrochemical and small portion of raw materials was to be imported.

According to Suhat, butadiene could be further processed into SBR (styrene butadiene rubber), ABS (Acrylonitrile butadiene styrene), SBL (styrene butadiene latex) and others.

SBR can be further used as raw materials to produce synthetic rubber, constituting components for tire and plastic related automative components industries.

So far the need for butadiene in Indonesia is still imported from foreign countries such as Korea and Japan.

With the operation of PT. Petrochemical Butadiene Indonesia later, the tire producers and national automative components will be able to trim the import cost, thus increasing the scale of production in addition to strengthening domestic petrochemical and automotive industries capable of recording a significant progress.

With domestic production of butadiene, all kind of tire production costs could be reduced, thus paving the way for national tire industries to make a speedy progress in the years to come, Suhat said.