This Week's Headlines (May 4-10, 2024)

10 May 2024


Shell to sell Singapore refinery, petchem assets to Chandra Asri and Glencore 


Shell said on Wednesday it has agreed to sell its refinery and petrochemical assets in Singapore, Asia's main oil hub, to a joint venture between Indonesian chemicals firm Chandra Asri and Swiss miner and commodities trader Glencore. 


Reuters reported last August that Shell had hired Goldman Sachs to explore a potential sale of its refining and petrochemical plants in Singapore as part of a broader strategic review globally to become a lower-carbon operator. 


The sale is part of Shell CEO Wael Sawan's plan to reduce the company's carbon footprint and focus its operations on the most profitable businesses. 


The transaction will transfer all of Shell’s interest in Shell Energy and Chemicals Park Singapore to the joint venture company CAPGC, Shell said in a statement. 


The companies did not provide a value for the deal. 


Subject to regulatory approval, the transaction is expected to complete by the end of 2024, Shell added. 


The buyers of Shell's assets on Bukom and Jurong islands would gain a foothold in one of the world's top oil refining and trading centres but would also face competition from newer refineries in China and elsewhere - the Bukom facility opened in 1961 - as well as a Singapore carbon tax set to rise sharply in 2024. 


CAPGC is majority-owned and operated by Chandra Asri Group and minority-owned by Glencore through their respective subsidiary companies, the Indonesian company said in a statement. 


Shell's assets include a refinery capable of processing 237,000 barrels per day (bpd) of oil and a 1-million-metric-ton-per-year (tpy) ethylene plant located on Bukom island, just south of Singapore, as well as a plant that produces mono-ethylene glycol on Jurong island in the Southeast Asian city-state's west. 


CAGP and Vitol had been the final bidders for the assets after shortlisted Chinese firms including state-run China National Offshore Oil Corp (CNOOC) dropped out. 


Acquiring Shell's plants in Singapore would provide Chandra Asri with naphtha feedstock for its cracker and allow the company to integrate its petrochemical production with refining which could improve its efficiency and reduce costs. 


"Chandra Asri has been a leading player in the olefins and downstream space in Indonesia for decades, and has been looking to expand its current portfolio within and outside Indonesia for many years ... this foothold in the petrochemical hub of Southeast Asia will give it leverage in increasing its ASEAN footprint and lift itself to be a truly regional player," said Wood Mackenzie's global head of polyesters, Salmon Lee. 


Chandra Asri operates Indonesia's sole naphtha cracker, which can produce 900,000 tons of ethylene and 490,000 tons of propylene annually, basic raw materials that are further processed at the complex into other petrochemicals. 


For Glencore, Shell's assets would give the global trader a physical foothold for its trading in Asia. 


Glencore's only refining asset is a 100,000 bpd facility in Cape Town that is South Africa's third-largest refinery. It also owns a lubricants plant in Durban. 


A partnership with Glencore also means Chandra Asri can harness the trading giant's strengths in not only the trading sphere but also on the logistical front, Woodmac's Lee added. 


Shares of Chandra Asri Pacific rose as much as 1.9%, outperforming the benchmark Indonesia index's 0.5% drop on Wednesday afternoon. Its shares have climbed 49% so far this year, giving it a market value of some $42 billion, LSEG data showed. 


Shell's shares in London rose 0.1% and have climbed nearly 13% so far this year. Last week the company smashed forecasts with a $7.7 billion first-quarter profit, buoyed by cost cutting and its strategic shift. 


Source: Reuters 



Eramet to help Indonesia find lithium deposits 


The partnership is expected to explore new mineral deposits, including a potential one in Bledug Kluwu in Central Java. 


The Energy and Mineral Resources Ministry has agreed to partner with French mining group Eramet to explore the country’s deposits of critical minerals, including lithium, which has not been discovered.  


The partnership is expected to explore new mineral deposits that will strengthen the country’s ambition to become a global hub for electric vehicles (EVs).   


“Eramet is working with the Geology Agency to explore [areas of potential deposits],” Geology Agency head Muhammad Wafid told reporters on Tuesday.    


Wafid said lithium was an important mineral for Indonesia if the country wanted to become a critical player in the global electric battery industry. Indonesia, he said, currently had discovered and secured nickel and cobalt, but it has yet to discover lithium. The three minerals are key materials in the production of EV batteries.   


Indonesia is well-endowed with nickel, accounting for 37 percent of global nickel production and 22 percent of international reserves, but lacks lithium. The country is naturally very ambitious to become a regional battery production hub and eventually a center for the EV industry but it needs lithium, a critical component for the car battery industry.  


The government has tried to strengthen ties with Australia, the world’s largest lithium producer, by signing an agreement to double the import quota of lithium to 120,000 tonnes per year.   


The Indonesian Chamber of Commerce and Industry (Kadin) has also signed an agreement with the state government of Western Australia, the region that holds the largest lithium deposits in the country, on the 2023-2025 action plan to strengthen industry capabilities and invest in skills in both countries to accelerate efforts to meet environmental, social and governance (ESG) requirements.  


About 90 percent of the world’s lithium output comes from just three countries, according to the World Economic Forum, namely 52 percent from Australia, 25 percent from Chile and 13 percent from China.  


Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan claimed in December that the country had discovered a large lithium deposit although he did not disclose its location.   


“I just received a report that there is a huge lithium deposit discovered in Indonesia. Earlier, [we were] worried about lithium supplies. We wanted to get it from Australia, but now we’ve discovered this huge resource,” he told reporters in Bali at that time. 


In the partnership with Eramet, Muhammad said the company would provide the technology for critical mineral exploration while the government would issue permits for exploration studies in several areas in the country, including Bledug Kluwu in Central Java. The joint work between Eramet and the Geology Agency is slated to begin in August this year.   


Eramet has participated in Indonesia’s nickel sector for more than 17 years through its stake in PT Weda Bay Nickel (WBN), a joint venture that runs a nickel industry cluster in Weda Bay, which is perched between Central Halmahera and East Halmahera in North Maluku.   


According to its website, Eramet holds a 38.7 percent share of WBN while China’s largest stainless steel producer Tsingshan owns a majority of 51.3 percent. The government, through state-owned miner PT Antam, owns the remaining 10 percent.  


Source: The Jakarta Post 



Widodo confirms Freeport's export permit extension


President Joko Widodo (Jokowi) confirmed the extension of PT Freeport Indonesia's (PTFI's) copper concentrate export permit, which was set to expire on May 31, 2024. 


"Yes, we will continue the permit," he assured on the sidelines of a working visit to Karawang, West Java, on Wednesday. 


However, the head of state said, the government still needs to consider the benchmark export price (HPE) for Freeport, considering that the HPE for several mining commodities will increase in April 2024. 


He also lauded the construction of a Freeport smelter in Gresik, East Java, which will refine 1.7 million tons of copper concentrate and produce up to 600 thousand tons of copper cathodes per year. 


He also assured that the government is continuing to monitor the smelter construction process, which has almost reached completion. 


"We appreciate that Freeport and (PT) Amman (Mineral) have built the smelter. It is almost complete. We always monitor the progress weekly," he said. 


He added that the smelter construction demonstrates the strong willingness of Freeport and PT Amman to support the downstream industry in Indonesia. 


"I think what they did was good and we should appreciate it," he emphasized. 


Earlier, PTFI had proposed another extension (relaxation) of exports of copper concentrate and anode mud until the Manyar smelter in Gresik, East Java, becomes fully operational by the end of 2024. 


The construction of the Manyar smelter is targeted to be completed in June, following which, the facility will be commissioned and the production schedule will be ramped-up until the end of 2024. 


The government had earlier granted permission to extend PTFI's concentrate exports — which were supposed to end in June 2023 — until May 2024. 


The main products made by the smelter are copper cathodes, pure gold and silver bars, and platinum group metal (PGM). Its additional products include sulfuric acid, gypsum, and lead.


Source: Antaranews