Barito to start pulp production in 1997
JAKARTA (JP): The Barito Pacific Group announced over the weekend that it will establish a medium density fiberboard (MDF) factory and pulp plant, both of which are expected to start production in 1997.
Johannes Hardian, the president of Barito Pacific's subsidiary, PT Musi Hutan Persada, told members of the House of Representatives' Budgetary Commission during their visit to Palembang, South Sumatra, that both plants will be located in that province.
Hardian was quoted by Antara as saying that the new pulp plant, PT Tanjung Enim Lestari Pulp & Paper, will be built in collaboration with Japan's Marubeni Corp. and Nippon Paper Industries.
The MDF plant, he said, will be established solely by Musi Hutan Persada, which has concessions for a total of 193,000 hectares for industrial timber plantation in South Sumatra.
Sixty percent of Musi Hutan Persada's shares are owned by Barito Pacific and 40 percent by state-owned PT Inhutani II.
Although he declined to mention the sum of the investment required for the projects, Hardian said that the pulp project would have an initial capacity of 450,000 tons per year and the MDF plant 240,000 tons a year.
The pulp factory will have a capacity of one million tons per year.
Minister of Forestry Djamaludin Suryohadikusumo said last month that plywood, which is one of Indonesia's major non-oil export commodities, would be gradually replaced by MDF and laminated vinyl lumber due to changing forest conditions and the government's sustainable development policy.
Over the next 10 to 25 years, he said, the sizes of large- timber forest areas will decrease and many of them will be used mainly as protected forests and national parks.
Panel boards, he said, will no longer be made from large trees but from smaller, faster-growing species cultivated by concessionaires which must be made into pulp before being processed into boards.
Export
Djamaludin is optimistic that annual exports of wood products can net at least US$10 billion in the next 10 years without having to rely on plywood.
Indonesia, which currently produces 10 million cubic meters of plywood per year, supplies about 80 percent of the world plywood market.
According to the Central Bureau of Statistics, exports of wood products, which mostly consist of plywood, currently account for 13 percent of Indonesia's overall annual export earnings.
Hardian said that raw materials for the planned plants will be supplied by Musi Hutan Persada's industrial timber estates, 160,000 hectares of which have already been planted mainly by Acacia mangium.
He explained that for the first year, the pulp plant will need about two million cubic meters of raw materials, which will be obtained from 11,250 hectares of Musi Hutan Persada's concessions.
Starting from the second year of production, the plant will require 4.5 million cubic meters of raw materials to meet a targeted production capacity of one million tons of pulp a year.
The raw material for this will be taken from 25,000 hectares of Musi Hutan Persada's timber estates.
Hardian acknowledged that the future prospect of the MDF industry was bright, as market demands were favorable and raw materials in the country were abundant.
He also pointed out that only a few companies were currently operating in the MDF industry in Indonesia.
Current pulp prices are $900 per ton while MDF prices are $300 per cubic meter. Other companies in the MDF industry in Indonesia include PT Sumalindo Lestari Jaya.
Tanjung Enim Lestari's plans, however, were criticized by the Indonesia Forum for Environment (Walhi), which said the development of the plants will cause a "massive social problem".
The company has "seized the people's forests and farmland without any prior consultation," said Walhi, a prominent non- governmental organization.
The pulp and paper mill, Walhi continued, will also be constructed on virgin forests, thereby endangering forest sustainability. (pwn)