Region's Largest Pulp Mill
President Soeharto inaugurated Southeast Asia's largest single-line pulp mill on Aug 6, a $1.3 billion project located in Mangkajang, East Kalimantan.
"The most important thing is that we have implemented sustainable development and sustainable biodiversity in Indonesia's forests," Soeharto said while officiating
at the opening of the PT Kiani Kertas mill.
Located on the Pantai river in a remote area of East Kalimantan, the operation includes an airstrip and a river port. Accommodation for some 1,000 employees has
been built, and education and health services are planned. The mill, which started commercial production the same month, is expected to reach full production
capacity of 500,000 tons of air-dried pulp per annum within three months.
Spread over an area of 3,400 hectares (8,400 acres), the venture is almost completely owned by Indonesian timber magnate Muhammad "Bob" Hasan through his
Kalimanis conglomerate. Hasan told reporters that some of the equity was held by two charitable foundations headed by the President. He added that the company
would consider floating part of its equity after production was up and running. Hasan has provided some $700 million of the financing for the project with the rest
coming from two bank syndicates. The giant pulp mill will demonstrate how industry and natural habitats can coexist, he said.
"We have spent $25 million on the conservation area," Hasan said, adding that a huge reforestation program would be undertaken alongside the logging.
"Everything we do here is sustainable."
An area of 34,000 hectares (84,000 acres) within the firm's 450,000 hectares (1.1 million acres) of timber concessions are designated as a protected area,
allowing wildlife and natural vegetation to be maintained. Green belts, where no logging will be allowed, will surround the areas allocated for timber cultivation.
Dick Youngberg, the head of marketing, said all the produce of the company would be exported and that some pre-sale contracts had already been signed.
Primary markets are Japan and Taiwan. Export earnings are projected to reach about $225 million per year, based on an average price of about $500 per ton. |
