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)