Pulp producers' closure expected to push up prices<\/p>\n
JAKARTA (JP): Pulp prices, which have been dropping since
\nOctober, are likely to recover when 20 pulp manufacturers in the
\nnorthern hemisphere close down later this year as expected, an
\nexecutive says.<\/p>\n
Timber baron Mohamad (Bob) Hasan said yesterday he was
\nconfident there will be many marketing opportunities for pulp
\nbecause consumption in developing countries, including Indonesia,
\nis currently less than 10 kilograms per capita per year, far
\nbelow that of Japan and North American and European countries,
\nwhich consume 200 kg per capita per year.<\/p>\n
He pointed to the highly competitive nature of Indonesia,
\nwhere the raw materials for pulp factories come from fast growing
\ntree species which can be harvested after seven or eight years,
\nas opposed to the 40 years required by species grown in the
\nboreal and temperate forests of subtropical regions.<\/p>\n
Manufacturing costs in Indonesia, as low as US$250 per ton,
\nare also more competitive when compared with the $550 to $600 per
\nton required in most developed pulp-manufacturing countries, Bob
\nsaid.<\/p>\n
\"With costs as low as this, we can compete with anyone,\" he
\nsaid.<\/p>\n
Analysts predicted earlier this year that Indonesian pulp and
\npaper companies would suffer profit declines due to dropping
\nprices on the world market and an oversupply of up to three
\nmillion tons.<\/p>\n
In February, pulp prices on the international market declined
\nto $875 per ton since peaking at $1,000 last October for Northern
\nBleached Softwood Kraft, the benchmark for pulp pricing.<\/p>\n
Loan<\/p>\n
Bob signed a syndicated loan yesterday for the construction of
\npulp manufacturing plant PT Kiani Kertas in the East Kalimantan
\nvillage of Mangkajang in Berau regency.<\/p>\n
Kiani Kertas was awarded a syndicated loan worth US$410
\nmillion.<\/p>\n
The arranger of the syndicated loan was Bank Negara Indonesia
\n1946, while Bank Dagang Negara and Bank Umum Nasional were co-
\narrangers.<\/p>\n
Other syndication members were Bank Danamon, Bank
\nInternasional Indonesia, Bank Tabungan Negara, Bank Universal,
\nBank Central Asia, Bank Duta, Bank Umum Koperasi Indonesia, Bank
\nPDFCI, Bank Niaga, Bank Panin, Bank BDNI and Bank Rama.<\/p>\n
Bob, who is the company's chief commissioner, said the loan
\nwill be part of the company's total investment of $930 million.
\nThe remaining $520 million will be self-financed.<\/p>\n
The 3,400-hectare factory, which will have a production
\ncapacity of 1,500 tons a day, or 500,000 tons a year, is expected
\nto start production in early 1997.<\/p>\n
According to Bob, Kiani Kertas has obtained a license to
\nexport its products and has met the environmental requirements
\nstipulated by the minister of environment.<\/p>\n
Raw materials for Kiani Kertas will come from its 180,000
\nhectares of pulpwood plantation in East Kalimantan.<\/p>\n
Bob said that most of the pulp will be exported. \"But if it is
\nneeded, we will also sell about 10 percent to the domestic
\nmarket,\" he added. (pwn)<\/p>\n
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