MNK to build new plants worth $56m

Ika Krismantari, The Jakarta Post, Jakarta | Tue, 12/23/2008 10:59 AM  

After being acquired by PT Ancora Indonesia Resources (AIR), PT Multi Nitrotama Kimia (MNK), an explosives raw material producer, is set to build a new plant to increase existing capacity with a total investment of US$56 million. 

MNK plans to start building the plant with a total capacity of 100,000 metric tons of ammonium nitrate -- a material used for explosives -- in its industrial site in Cikampek, West Jawa. The plant is targeted for completion in 2009. 

AIR president director Usman H.Darus said on Monday the decision to build the plant was taken as the explosives business would be a good opportunity for the company, enabling it to take advantage of the robust growth in the mining sector. 

AIR has recently taken over 40 percent of MNK shares under its strategy to become a service provider for mining companies. 

Jakarta-based AIR is a subsidiary of Hongkong-based investment and buyout company Ancora Capital Management Limited which was founded by JPMorgan alumni Gita Wirjawan. 

MNK currently controls 70 percent of the country's market share for explosive materials. 

The expansion plan is expected to meet the rising demand for explosives, which has been steadily growing at an average of 7 percent annually. This year, demand is expected to reach 300,000 metric tons. 

MNK owns two plants producing nitric acid and ammonium nitrate with a capacity of 37,000 metric tons and 55,000 metric tons, respectively. 

Meanwhile, AIR is also planning to acquire mining sites in the hope of expanding its mining business. 

Usman said the company was currently in talks with a number of coal companies in Kalimantan to acquire five coal concession with a total reserve of 15 million tons.