Severe wood shortage at Indah Kiat mill

Severe wood shortage at Indah Kiat mill

JAKARTA (JP): The shortage of wood materials currently being
experienced by PT Indah Kiat Pulp & Paper has been so severe that
its pulp mill in Riau may be forced to operate at only 50 percent
of its annual designed capacity of 900,000 tons, an industry
consultant said yesterday.

The consultant, who insisted on anonymity, was commenting on
Forestry Minister Jamaludin Suryohadikusumo's remarks during his
visit to Riau last week about the acute problem of wood
provisions for the Indah Kiat pulp plant.

He confirmed the minister's statement that Indah Kiat requires
four million cubic meters of wood materials a year to feed its
pulp plant.

"But the company can get a maximum of 50 percent of the total
need," the consultant said.

Indah Kiat, a member of the Sinar Mas group, is one of six
pulp and paper companies listed on the Jakarta Stock Exchange.

None of Indah Kiat's officials were available yesterday for
comment.

The consultant added that Sinar Mas forest concessions in Riau
could supply only around 1.2 million cubic meters while Indah
Kiat's timber estates could provide one million cubic meters at
the most.

"Hence, Indah Kiat may able to get only 2.2 million cubic
meters of wood materials a year which are sufficient to produce
only 500,000 tons of pulp," he said.

Harvest

He refuted the recent estimate by a director of Indah Kiat,
Njauw Kwet Meen, that about 30,000 hectares of the company's
timber estates could now be harvested with a yield of 100 to 200
cubic meters per hectare.

"My own estimate puts only 10,000 hectares of the Indah Kiat
timber estates ready to be harvested," he said.

During his visit to the Indah Kiat pulp industry in Riau last
week, Minister Jamaludin criticized the Sinar Mas subsidiary for
its poor planning in timber estate development and logging.

"Indah Kiat has been too preoccupied with input procurement at
the expense of its timber estate development," Jamaludin said.

So severe has been the wood shortage encountered by the Indah
Kiat pulp mill that the minister ordered the Salim Group to
accelerate the conversion of its 125,000 hectare concession in
Riau into oil palm estates so that the wood from the land
clearing could help remedy the wood shortage.

The minister said he would consider granting a new concession
to Indah Kiat only after the company had improved the planning
and development of its timber estate concessions.

The Sinar Mas Group plans to list its pulp and paper business
on the New York Stock Exchange through its listing vehicle, Asia
Pulp and Paper.(vin)