Local melamine plant gets $30.5m in on-shore loans

JAKARTA (JP): PT DSM Kaltim Melamine received yesterday US$30.5 million in a syndicated on-shore loan to support the construction of a $130.1 million melamine plant in Bontang, East Kalimantan.

The loan syndication, led by Bank Pacific and co-arranged by PT Bank PDFCI, includes funds provided by Bank Universal, Bank Bali and Unibank.

The loan, which will mature in 2001, carries a floating interest rate which will be revised every six months.

DSM Kaltim is 60 percent owned by DSM Chemicals and Fertilizers BV of the Netherlands, 20 percent by PT Barito Pacific Lumber Company and 20 percent by a state-owned fertilizer company PT Pupuk Kalimantan Timur.

The melamine plant is scheduled to be completed by the third quarter of next year. The plant will have an annual production capacity of 50,000 tons.

Melamine, which is produced from urea, is used to make melamine formaldehyde resins, improving their resistance to heat, flame, moisture, scratching and shrinking. It is widely used in the paper and textile industries as well as in the manufacture of adhesives, laminates and coatings.

Endang Utari Mokodompit, president of Bank Pacific, acknowledged that both Pupuk Kalimantan Timur and Barito Pacific, as shareholders in DSM Kaltim, would benefit from the new plant.

Pupuk Kalimantan Timur, she said, would have a market for its urea output, while Barito Pacific would be assured of a constant supply for melamine used in plywood glue.

A. Tervoort, President of DSM Kaltim, was optimistic that the world demand for melamine would continue to boom. The company's plant will, he said, be one of the biggest of its kind in the world.

Currently there are three operational melamine plants in Japan, one in Taiwan and several small plants in China, Tervoort said.

DSM Kaltim's melamine plant will represent the relocation of a plant from the Netherlands which used to obtain raw materials from the former Soviet Union. Following the collapse of the latter, it was decided to relocate it to East Kalimantan, which was considered more cost-effective in terms of proximity to the market and to raw materials.

Tervoort said that up to 60 percent of DSM Kaltim's production would be exported to other Asia-Pacific countries, while the remaining 40 percent would be sold to domestic buyers, including Barito Pacific, which would take between five percent and 10 percent of the plant's output. (pwn)