According to WPB, Chinese asphalt producer Xi'an Zhongli Asphalt Co., Ltd. has outlined a $60 million investment plan to establish a natural asphalt processing plant in Indonesia, with a proposed annual production capacity of 600,000 metric tons. The facility, planned for the island of Java, would process natural asphalt resources from Indonesia's Buton Island and support the country's efforts to reduce its dependence on imported petroleum bitumen. Details of the proposal emerged on October 28–29, 2026, following investment discussions between Indonesian authorities and Chinese companies.
The planned factory would be developed in stages until reaching its full production capacity. According to the investment proposal, its output would serve Indonesia's domestic road construction market, potentially replacing part of the petroleum-based bitumen currently imported from overseas suppliers. The company is also considering export opportunities for processed Buton asphalt products. However, a final construction schedule, commissioning date, and confirmed initial production volume have not been announced.
The investment proposal follows meetings held in Shanghai on October 22–23, 2026, as part of Indonesia's efforts to attract industrial investment and expand domestic processing of natural resources. The discussions addressed production technology, manufacturing capacity, commercial arrangements, and cooperation with relevant Indonesian institutions. The latest announcement provides more specific investment and capacity targets for a project that has been under discussion for some time.
Xi'an Zhongli's interest in Indonesia's asphalt industry predates the October announcement. In April 2025, the company participated in discussions with Indonesia's Ministry of Public Works and the Indonesian Buton Asphalt Developers Association concerning investment in a facility to process natural asphalt from Buton Island. The latest proposal therefore represents a further development of an existing investment initiative rather than the first expression of Chinese interest in the project.
The commercial significance of the proposed plant is closely linked to Indonesia's substantial reliance on imported petroleum bitumen. According to World Bank WITS data based on UN Comtrade, Indonesia imported 970,461 metric tons of petroleum bitumen in 2024, valued at approximately $453 million. Singapore was the country's largest supplier, accounting for 770,126 metric tons worth approximately $366 million, equivalent to around 79.4% of Indonesia's total petroleum bitumen imports by volume.
Other supplying countries included the United Arab Emirates, Malaysia, China, South Korea, and Iraq. The concentration of imports from Singapore highlights the importance of regional supply chains and the potential exposure of Indonesian buyers to international bitumen prices, marine freight costs, and changes in refinery production and export availability.
Indonesia has long sought to increase the use of asphalt resources available on Buton Island in Southeast Sulawesi. Commonly known as Asbuton, this naturally occurring material contains bitumen associated with mineral deposits. Unlike conventional petroleum bitumen produced through crude oil refining, natural Buton asphalt requires suitable processing or blending before it can be incorporated into different types of road pavement.
This distinction is important when assessing the proposed factory's potential impact on imports. A nominal processing capacity of 600,000 metric tons does not necessarily represent 600,000 tons of recovered pure bitumen. The amount of petroleum bitumen that could be replaced will depend on the type of processed Asbuton product, its bitumen content, the extraction or blending technology used, and the technical specifications required by road construction projects.
Indonesia's Ministry of Public Works has identified the limited use of Buton asphalt as a longstanding challenge. In a technical assessment published in February 2026, the ministry noted that the use of processed Asbuton on national roads had remained relatively stagnant at around 58,000 tons annually between 2015 and 2024, equivalent to approximately 14,000 tons of bitumen content. The difference illustrates why processing capacity alone is insufficient to measure the industry's actual contribution to replacing petroleum-derived binder.
The country's regulatory framework has also evolved to support wider adoption. In May 2026, Indonesia introduced Ministerial Regulation No. 10 of 2026 governing the use of processed Buton asphalt in road construction and preservation. The regulation establishes provisions for technical applications, procurement, monitoring, and industry development, with the stated objective of reducing dependence on imported asphalt materials.
The government has also begun introducing Asbuton-based mixtures containing a specified proportion of processed natural asphalt in selected toll road applications. These measures could help create a more established domestic market for locally processed products, although adoption will continue to depend on material performance, technical compliance, production reliability, and competitive delivered prices.
The proposed location on Java introduces an additional logistics consideration. Buton Island, the source of the natural asphalt, is located in Southeast Sulawesi, while much of Indonesia's industrial activity and road construction demand is concentrated on Java. Transporting raw or partially processed material between the islands would therefore form part of the project's supply chain. Its commercial competitiveness will depend on the cost of obtaining, processing, and transporting the material to end users.
For regional bitumen exporters, the project could become significant if it reaches commercial operation and begins replacing imported products at scale. Singapore would be particularly relevant because of its dominant position in Indonesia's recorded petroleum bitumen imports. Nevertheless, the proposed plant's full capacity cannot be treated as a direct forecast of reduced imports, especially as part of its eventual production may be intended for export markets.
Several uncertainties remain before the investment can influence physical supply. These include project financing and execution, the selected processing technology, raw material arrangements, product specifications, construction milestones, and confirmed sales agreements. The current announcement does not establish that the facility is under construction or that production has begun.
For Indonesia's bitumen market, the proposal represents a potentially important step toward developing domestic alternatives to imported petroleum-based binders. If successfully implemented, the project could expand the commercial use of Buton asphalt and diversify supply options for road construction. Its actual impact on regional bitumen trade will depend on how much suitable material the plant ultimately produces, how competitively it can be supplied, and what proportion of output is consumed domestically.
By WPB
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