U.S. investor eyes Buton asphalt reserve

JAKARTA (JP): A U.S. investor has signed an agreement with local firm PT Eka Karma to cooperate on developing natural asphalt resources on Buton island, Southeast Sulawesi, the province's governor said on Friday.

La Ode Kaimoeddin said in the provincial capital of Kendari the product would be exported to the United States for infrastructure projects.

Although he refused to disclose the name of the company, he quoted it as saying that America needed 35 tons of asphalt per year.

"If Buton could take two million tons of the U.S. market demand, that would be very great. And that could be a starting point for Buton to reawaken its asphalt industry," La Ode told Antara news agency.

The country had long relied heavily on asphalt from Buton for the construction of roads, but it was gradually replaced by asphalt from oil refinery residue.

The governor said the island regency's onshore natural asphalt reserve amounted to 400 million metric tons. Offshore areas are also believed to have rich deposits.

He said the government had awarded a contract to state company PT Sarana Karya to develop the asphalt reserve on 300 hectares.

It currently produces 200,000 tons of bulk asphalt and micro asphalt annually, the governor said.

The government also awarded a contract to PT Amerta Margayasa Asphalt, but the company faced difficulties in marketing its products, La Ode said.

A consortium including PT Hutama Prima had planned to develop an asphalt refinery plant in Buton, but it was beset by financial problems in realizing its investment plan due to the monetary crisis, he added.

"We are making a report to President B.J. Habibie on the asphalt potential in Buton, with an expectation that he will support the use of Buton's asphalt for the country's development projects."

He suggested the government should use Buton asphalt rather than pricier oil asphalt for road construction to save money in the crisis.

He said Buton's natural asphalt cost Rp 200,000 (US$18.1) per ton, compared with oil asphalt's price of between Rp 2 million and Rp 3 million per ton. (jsk)