TOKYO -- Japanese glass maker Asahi Glass plans to build a coal-fired power plant in Indonesia to generate its own electricity for producing chemical products, sources told The Nikkei on Wednesday.
The company plans to spend a total of $400 million on the project, one of the biggest investments in the history of Asahi Glass. The new power plant is scheduled to go online in 2017, according to the sources.
Asahimas Chemical, Asashi Glass's Indonesian chemical product subsidiary, will add the planned facility to its existing plant that turns out vinyl chloride resin and sodium hydroxide.
The power plant will use a mix of locally produced coal and biomass fuel and have a generation capacity of 250,000 kilowatts. The new power plant will likely have a 20% higher generating efficiency than that of conventional coal-fired power plants, according to the sources.
Electricity charges are estimated to account for about 60% of the company's production costs in Indonesia. Asahi Glass aims to slash costs by tens of millions of dollars a year by generating its own electricity instead of purchasing it from outside power companies. Doing so, the company believes, will help boost the competitiveness of its products.
Vinyl chloride resin is made up of chlorine and sodium hydroxide. Both of these chemicals are produced by the electrolysis of salt. Vinyl chloride resin is used in sewage pipes, while sodium hydroxide is used in the paper-pulp manufacturing process. Both are basic chemical products.
With infrastructure projects picking up pace in Indonesia and other Southeast Asian countries, market demand for vinyl chloride resin and sodium hydroxide is estimated to grow more than 5% a year. Asahi Glass aims to capture a significant piece of this robust demand.