Thai firm to set up pulp plant in East Kalimantan

JAKARTA (JP): PT Surya Hutani Jaya of Indonesia and Siam Cement Company of Thailand will jointly construct a pulp plant in Kutai, East Kalimantan with an investment of US$700 million.

"The construction of the plant is scheduled to be completed later next year and production will start in the second semester of 1998," Surya Hutani's general manager, Nadir P. Silalahi, announced in Kutai over the weekend.

Surya Hutani is owned 60 percent by PT Astra International and PT Barito Pacific, and 40 percent by the state-owned PT Inhutani I.

Nadir said he could not specify the production capacity of the pulp project, nor the capital structure of the joint venture, to be called PT Nityasa Prima.

"We're still at the stage of completing basic engineering, which includes a study on its technical feasibility, water procurement system, transportation and pulp processing," he was quoted by Antara as saying.

Nadir said that the investment for the project will be derived from its own equity and loans from a syndication of foreign banks. He refused to identify the banks involved.

He said that the plant will be managed by PT Sumalindo, the majority of whose shares are owned by Astra International.

To feed the pulp plant, Surya Hutani has developed a 104,000- hectare timber estate which is expected to produce 2.6 million cubic meters of wood a year.

Meanwhile, the director of the pulp and paper industry at the Ministry of Industry and Trade, Gatot Ibnusantosa, last week told seminar participants in Pekan Baru, Riau, that Indonesia may not reach its pulp export target of 1.2 million tons this year due to the oversupply that has lowered pulp prices on the world market.

The director pointed out that during the first two months of this year, Indonesia's pulp exports reached 59,389 tons and were only worth US$29.9 million.

"The January-February exports were only 10 percent of this year's target," he noted.

He said that Indonesia's pulp exports last year reached 577,000 tons, far below its target of 900,000 tons.

According to Gatot, if pulp prices continue decreasing, Indonesia will find it difficult to realize its pulp export target this year.

"The oversupply has resulted from the increases of production in North American and Scandinavian countries," he told the Kompas daily.

He said the world's annual pulp production is estimated at 20 million tons, of which 80 percent is produced by North America and Scandinavia.

The two regions exported 11 million tons of their pulp production, some of it to Indonesia's main buyers in Asia. (13)