RI-U.S. joint venture enters pulp industry

JAKARTA (JP): A new Indonesian and American joint venture, PT Indokor Callaway, plans to invest a total of US$4 million to build two plants to produce chemicals for the improvement of the quality of the country's pulp and paper.

Frans Sudarmanto, marketing director of PT Indokor Indonesia, the Indonesian partner of the joint venture said on Tuesday that one of the plants is under construction at the Jababeka Industrial Estates in Cikarang, West Java and is scheduled to be completed next month.

Construction of the second plant will begin in October this year in Surabaya, East Java, he said.

Indokor Callaway is equally owned by PT Indokor Indonesia and American chemical company Vulcan Performance Chemicals. Both companies signed the joint venture agreement on June 14 in New York during President Abdurrahman Wahid's visit to the country.

Under the joint venture, Vulcan will provide research and development capabilities, technical and operation expertise, while Indokor will be responsible for investment in the processing plant and will support Vulcan in the marketing and distribution.

One of Vulcan's products to be produced by Indokor Callaway is called Callaway 911, an acrylamide copolymer dry strength additive, which is able to improve the strength of various pulp and paper products, including lineboard, corrugated materials, medium grade newsprint and bagging.

Frans said Callaway 911 is suitable for the country's pulp and paper industry which mainly uses mixed tropical hardwood and accacia as raw materials.

These tree species have short fibers, which produce papers with inferior strength quality.

Indonesian pulp and paper mills must import pulp of long- fibered trees to increase the strength of their paper products, Frans said.

Today, Indonesia mills import the Northern Bleached Softwood Kraft (NBSK) and Northern Unbleached Softwood Kraft (NUSK) long fiber pulp. He said the prices for these have increased to $650 per ton, from $440 per ton last year.

"Indonesia's mills can't afford it and must get strength elsewhere or shut down. Callaway 911 will give them the strength they need to reduce the use of the expensive imported fibers," Frans said.

Earlier, chairman of the Indonesian Pulp and Paper Association M. Mansur said the price of paper on the domestic market increased to Rp 8,000 (93 cents) per kilogram (kg), from Rp 800 per kg before the economic crisis struck the country in late 1997.

Mansur attributed the price hike to the increase in domestic demand and the increased costs of imported pulp. (jsk)