Kodeco expands activities in Irian Jaya

Kodeco expands activities in Irian Jaya

JAKARTA (JP): Korea Development Co. Ltd. (Kodeco) has been
diversifying its businesses in Irian Jaya from timber into the
exploration and development of gold, coal and minerals with an
additional investment of up to US$140 million.

"We are entering the easternmost Indonesian province in a big
way to develop its resources and create a lot of jobs for the
local people," Kodeco's Vice President Choi Jae Won said here
yesterday.

Choi said his investment expansion in the easternmost province
was prompted by the smooth implementation of Kodeco's $72 million
wood processing plant on Yapen island, north of Irian Jaya.

"Our wood industry will start trial production on April 5 with
annual capacities of 56,000 cubic meters (m3) of plywood, 48,000
m3 of container flooring, 30,000 m3 of sawn timber and 14,500 m3
of mouldings," Choi added.

The industry, which will employ more than 1,500 workers, is
supported by a 691,700 hectare forest concession owned by PT
Mamberamo Alas Mandiri in the northern part of Irian Jaya.

"We have also obtained preliminary approval from the
government to explore and mine gold and other minerals on Yapen
island and to prospect for and produce coal in the Horna area
near Manokwari, also in the northern part of Irian Jaya," Choi
said.

The gold exploration and mining project will involve a total
investment of $20 million and the coal venture $120 million. Both
projects are being implemented by PT Kodeco Sansaporindo Mandiri.

"We firmly believe in the business prospects of Indonesia's
easternmost region and will continue to look for new
opportunities in addition to our big investment commitments in
South Kalimantan," he added.

Choi said Kodeco and its partners-- PT Indocement Tunggal
Perkasa of Indonesia and Marubeni Co. of Japan-- will conduct the
first piling work at a $495 million cement plant near Batulicin,
South Kalimantan, on April 8.

It was in Batulicin where Kodeco started up its Indonesian
operations in 1968 in logging and later wood processing. Kodeco's
founder and Chairman Choi Gye Wol was the pioneer of South Korean
investment in Indonesia.

But Kodeco has now diversified into the manufacture of steel
container boxes and several other businesses, including oil and
gas mining near Madura island, East Java.

The cement plant, scheduled to come on stream in May 1998 with
an annual capacity of 2.5 million tons, is 46 percent owned by
Kodeco, 51 percent by Indocement and associates and 3 percent by
Marubeni.

A $345 million loan financing package for the project was
arranged by Fuji Bank of Japan and fully underwritten by several
other international banks.

The construction of the cement plant will involve contractors
and suppliers from Australia, Denmark, Japan, Singapore and
Indonesia.

Kodeco and its local partner, Faisal Rizani, are also
preparing the development of an oleochemical plant to process
coconuts from almost 4,500 ha of plantations near Batulicin, Choi
added.

The first stage of the project will involve an investment of
$170 million and is scheduled to be completed in the middle of
1998 with an annual capacity of 66,000 tons of fatty acids and
glycerin.

"We have concluded a memorandum of understanding with the
Manila-based Asian Development Bank for $120 million in a
financing package," Choi said.

The first stage will include the opening of at least 18,000 ha
of hybrid coconut plantations, of which almost 4,500 ha have been
planted, and several mills to produce such byproducts as coconut
oil, coconut cakes, rubberized coir fiber, coir fiber matting,
coconut shell charcoal and activated carbon. (vin)