Hankook to build in Indonesia; enter NR sector

By David Shaw, ERJ staff report

Qingdao, China -- Hankook has decided to build its sixth tyre plant in Indonesia, but the company is still negotiating with the Indonesian government over the size of the plant and the extent of support from the government. An additional benefit of Indonesia, said a company official, is that a large investment there will help Hankook to secure supplies of natural rubber in the mid-term.

Speaking at a corporate event in Qingdao in late October, J H Park, corporate vice-president for strategy and purchasing told ERJ exclusively, "maybe it will be Indonesia. It is just the size we are discussing today."

He added that Indonesia has a lot of natural rubber and that locating the plant in that country will help to secure supplies of the raw material. Park said the company is actively considering ways to secure supplies. One option is to invest in rubber processing factories, which would be a relatively small investment. Another -- more likely option -- is to develop a partnership with either a rubber estate company or with a series of rubber processing factories. This may eventually lead to the acquisition of a plantation said Park. "We are thinking to invest someday - not right now - in NR." he commented.

he said Hankook is aware that raw material supply will increasingly become an issue and Hankook is actively considering how to secure supplies of technologically significant raw materials. In many cases, the company can sign long-term supply contracts with suppliers, but in other cases, it may have to form joint ventures with suppliers, or even buy out completely a supplier. "We plan to go into strategic raw materials. This is a direction for the future and we need support from the raw material makers. We make a relationship with many suppliers," he said.

Park was speaking at the official opening of Rhodia's new silica factory in Qingdao, China on 20 October.