PT Kiani Kertas to start commercial production soon

PT Kiani Kertas to start commercial production soon

JAKARTA (JP): PT Kiani Kertas, a subsidiary of the Kalimanis
group owned by Indonesia's timber baron Muhammad "Bob" Hasan,
will start commercial operation in two weeks with an initial
production capacity of 30,000 tons of pulp per month, a senior
executive said.

Kiani Kertas' president, Suharsono Kramadibrata, said
yesterday that production would be gradually increased to the
plant's full capacity of 41,000 tons per month, or 500,000 tons
per annum.

Speaking to reporters after the company's hearing with the
House of Representatives Commission X for national development,
he said the company's trial operation was underway.

"We are still in the testing period and commercial production
will start two weeks from now," said Suharsono, who replaced
Machnan R. Kamaluddin as company president in June this year.

According to earlier reports, Kiani Kertas, dubbed the largest
single-line pulp mill in Southeast Asia, spent around 2.5 percent
of its US$$1.2 billion investment for the construction of a water
treatment plant.

The impact of the rupiah upheaval on the company's financial
performance would be insignificant because most of the company's
production would be exported, he said.

Suharsono said around 95 percent of the company's pulp
production would be exported to Japan, the United States, South
Korea, Australia and Europe.

"Since most of the product is for export, our revenue will be
generated in dollars too," he said.

Bob Hasan, a close associate of President Soeharto, said
previously that around $700 million of the project's financing
was derived from equity and $600 million from bank loans.

Special fund

The government has allocated around Rp 250 billion from
reforestation funds -- a special fund collected from timber
companies to finance reforestation programs -- as financial
assistance for Kiani. But Suharsono said his company had not used
the funds.

"No, we have not used the funds yet," he said.

Kiani Kertas' pulp plant occupies a 3,400-hectare site in
Berau regency, East Kalimantan.

Suharsono said yesterday that raw materials for the plant
would be supplied by a timber estate owned by PT Tanjung Redeb
Hutani, a joint venture between Bob Hasan and state-owned PT
Inhutani I.

He said since Tanjung Redeb would be able to feed the pulp
plant until 2001, the mill would initially use mixed local
hardwood as raw material. (aly)