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)