Chemical Manufacturing at Scale: From Feedstock Access to Integrated Production

A chemical plant's competitiveness is decided by three costs: feedstock, energy and logistics. Indonesia still struggles on all three. In the first half of 2025, the country exported US$10.75 billion of processed chemicals but imported US$13.23 billion, and the Ministry of Industry is targeting a US$9.5 billion cut in petrochemical imports. Inside the Java Integrated Industrial and Port Estate (JIIPE), Gresik Special Economic Zone (SEZ), feedstock, gas and a deep-sea port sit in one place, and large chemical investors have started to use that advantage.

The anchor project: Indonesia's first melamine plant

On 8 April 2026, construction began on Indonesia's first melamine plant at JIIPE. The US$600 million (CNY 4.2 billion) project is developed by PT GEABH Joint Technology, a subsidiary of China's Sichuan Golden-Elephant Sincerity Chemical Co., Ltd. (GESC), on more than 20 hectares. JIIPE is the group's first overseas investment.

The project is built in two phases:

• Phase 1 (CNY 1.24 billion, about US$170 million): 120,000 tonnes of melamine, 150,000 tonnes of nitric acid and 200,000 tonnes of ammonium nitrate a year
• Phase 2: a large-scale synthetic ammonia and urea plant using Indonesian natural gas, completing a chain from gas to finished chemical products

Coordinating Minister for Economic Affairs Airlangga Hartarto said the plant will process natural gas into liquid ammonia and then into urea, melamine and ammonium nitrate, reducing Indonesia's reliance on melamine imports.

Feedstock already flowing in the estate

The Freeport Indonesia copper smelter in JIIPE produces more than metal. At full capacity, its by-products include about 1.5 million tonnes of sulfuric acid, 1.3 million tonnes of copper slag and 150,000 tonnes of gypsum a year, all designated for the domestic market. Its anode slime circuit also yields about 285 tonnes of selenium, 220 tonnes of bismuth and 2,200 tonnes of lead a year. PTFI has said the smelter is expected to reach full operation by the end of 2027 as concentrate supply recovers.

These by-products are raw materials for other industries:

• Sulfuric acid: phosphate fertilizers, detergents, water-treatment chemicals such as aluminium sulfate, and metal sulfates for batteries
• Gypsum: cement retarder and plasterboard
• Copper slag: cement raw material and abrasive blasting media
• Selenium and bismuth: inputs for glass, pigments, electronics and specialty chemicals

Energy: why East Java matters

Natural gas is both fuel and feedstock for ammonia, urea and many base chemicals. Under Indonesia's Specific Natural Gas Price (HGBT) policy, petrochemicals, fertilizers, oleochemicals and glass are among seven sectors eligible for gas at US$6.5/MMBtu as feedstock and US$7/MMBtu as fuel.

Allocation is the catch. According to the Industrial Gas Users Forum in June 2026, only about 27.5% of allocated volume receives the HGBT price. Above that, users in West Java pay around US$20/MMBtu for regasified LNG, while in East Java the excess is supplied by pipeline gas at about US$8/MMBtu. For a gas-intensive plant, an East Java location can make a large difference to operating cost.

What integrated production looks like at JIIPE

Integration means one plant's output becomes the next plant's input, with pipelines and conveyors instead of trucks and ships.

Why build a chemical plant at JIIPE

• Feedstock from neighboring tenants, cutting the import and inland trucking costs that weigh on Indonesian chemical producers
• Deep-sea port inside the estate for bulk liquids and export to Southeast Asia
• Ready utilities: electricity, industrial water, natural gas and wastewater treatment
• Gresik SEZ incentives, with immigration services and a customs auto-gate system on site
• An established industrial base: manufacturing makes up 52.58% of Gresik's regional GDP, and the Gresik SEZ had attracted an estimated US$6.1 billion of investment by the end of 2025

Frequently asked questions

Is there already a chemical project in JIIPE? Yes. Golden Elephant's US$600 million melamine, ammonia and urea complex began construction in April 2026.

Can tenants buy sulfuric acid from the smelter? The smelter's sulfuric acid, slag and gypsum are designated for domestic sale. Supply arrangements are agreed directly with PTFI; JIIPE can facilitate introductions.

Which chemical sectors get special gas prices? Fertilizers, petrochemicals, oleochemicals, steel, ceramics, glass and rubber gloves are eligible for HGBT pricing.

In chemicals, scale comes from integration. Talk to the JIIPE team about land, utilities, port access and SEZ incentives for your next chemical plant.