Kaolin industry faces bankruptcy

Kaolin industry faces bankruptcy

JAKARTA (JP): Kaolin producers in Bangka and Belitung, South
Sumatra, are on the verge of bankruptcy because the mineral's
price has slumped domestically, the kaolin association said
yesterday.

The chairman of the Indonesian Association of Kaolin Industry,
Darkui Bunawan, said in Tanjung Pandan, Belitung, yesterday that
producers had been forced to slash their prices because domestic
demand had fallen 25 percent.

He said the kaolin price had dropped 23.5 percent to between
Rp 130 (US$0.056) and Rp 140 a kilogram since 1993 and 1994 when
it was around Rp 170 a kg.

"Despite the slumping price, their production costs have
increased steadily mainly because of rising fuel and labor
costs," he was quoted by Antara as saying.

Hartono, a director of PT Bintang Puspita Bumi Dwipa, a kaolin
producer in Belitung, said the current market price gave
producers a margin between Rp 30 and Rp 40 a kg.

Belitung regency data shows that the 17 kaolin industrialists
on the island in 1995 produced about 366,950 tons of kaolin, only
50 percent of their installed capacity.

Julius, the production director of kaolin producer CV Bumi
Sentosa, said the impact of falling prices had been exacerbated
by a price war among producers.

The weakening domestic demand is caused by the growing use of
substitutes such as calcium carbonate, he said.

Tjiwi Kimia, a large paper producer which was once a major
kaolin user, has turned to calcium carbonate to whiten its paper
products.

Wylit Marsudin, a marketing manager of PT Intialam Buana Raya,
said kaolin exports accounted for only 25 percent of Belitung's
total output.

Kaolin is mainly exported to Japan, Taiwan, Thailand, Malaysia
and the Philippines for $86 a ton, he said. (bnt)