Riau pulp's production falls 13 percent, says ARH

Riau pulp's production falls 13 percent, says ARH

SINGAPORE (Dow Jones): PT Riau Andalan Pulp & Paper's bleached
hardwood kraft pulp production in Indonesia fell 1.3 percent to
158,233 metric tons in the second quarter of this year from the
first quarter, according to a press release by Asia Pacific
Resources International Holdings (ARH) Wednesday.

The first quarter's production was 160,357 tons.

Singapore-based Asia Pacific Resources International, also
known as April, owns 98.5 percent of PT Riau Andalan Pulp &
Paper, or Riaupulp.

In the second quarter, around 38 percent of Riaupulp's
production was sold to Riau Andalan Kertas, or Riaupaper, and the
Changshu mill in Suzhou, China. April owns 99.8 percent of
Riaupaper through its subsidiary April Fine Paper. It also owns
49 percent of the Changshu mill.

Riaupulp's major markets are Australia/Asia, Europe and
Indonesia.

Riaupulp took eight days of scheduled annual maintenance
downtime in the second quarter, but is on target to achieve BHKP
production of about 760,000 tons in 1999, the release said.

To reach its longer-term goal capacity of two million tons a
year, Riaupulp is expanding its existing pulp line and in the
process of building a second line.

In the expansion of the current pulp line, it is targeting an
increase in production capacity to 850,000 tons/year.

April plans to build the second pulp line in two phases. The
first phase, which is half completed, is targeted to produce
450,000 tons/year, raising total production to 1.3 million
tons/year when completed.

Construction will take 18 months after the successful
conclusion of financing, currently being negotiated, according to
an April spokesman.

Construction of the line stopped last year as financing ran
out with the onset of the Asian economic crisis, he said.

This line is expected to cost around US$520 million, or
US$1,155 per annual installed ton. So far, about US$174 million
has been spent, financed largely by equity contributions from
April.

The management expects the remaining US$350 million to be
financed by existing lenders, cashflow from operations post-debt
restructuring, as well as customers, suppliers or additional
equity contributions, the release said.

According to the release, April has been selling BHKP at up to
US$520 a ton, cost and freight basis, North American ports.

April, which has an "extremely low" inventory, hasn't observed
any weakening of the pulp market despite the typical seasonal
slowdown due to the summer holiday, the release said.

The average price April received for third-party sales was
$437/ton, on a cost, insurance and freight basis, in the second
quarter, up $67/ton from the first quarter.

Riaupaper's uncoated wood-free paper production rose 11
percent to 60,027 tons in the second quarter from the first
quarter's 53,935 tons.

About 45 percent of second-quarter production was cut-size
paper and 20 percent offset/folio, with the rest being reel
format.

Riaupaper plans a maintenance downtime of three to four days
in the third quarter, but is on target to produce about 250,000
tons this year, the release said.

It posted sales of 59,433 tons of UWF paper in the second
quarter, up 14 percent from the 52,052 tons in the first quarter.

Approximately 44 percent of the second quarter's sales were
made through April's partners.