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Kiani Kertas start-up soon

Down To Earth 32 - February 1997

Timber tycoon Bob Hasan will soon start pulp production at his PT Kiani Kertas project in Berau district, East Kalimantan.

According to company president Machnan R. Kamaluddin, the new plant, which will initially produce around half a million tons of pulp a year, expects to start production in April this year. Construction started in September last year and is expected to be finished in March.

The plant is costing US$1.1 billion and occupies a 3,400 hectare site. The production is almost all destined for export markets, including Japan, the United States, South Korea, Australia and European countries.

The pulp plant is projected to earn between US$350 million to $400 million in foreign exchange per year and employ around 4,000 people. PT Kiani Kertas plans to float its shares on the US Nasdaq Stock Exchange in 1998.

Pulping the rainforest

Raw materials to feed the plant will eventually be supplied by a timber estate to be developed by a joint venture between another Hasan company, PT Tanjung Redeb Hutani, and state forestry company, PT Inhtuani I. The 180,000 hectare estate, planted with Acacia Mangium will be 35% financed by PT Tanjung, and 65% by government reforestation funds.

However, as is typically the case in Indonesia's burgeoning pulp industry, the pulp plant will be ready for start-up long before the first plantations trees will be ready for felling (or even before they have been planted). The PT Tanjung plantation will not be ready until 2001 and so mixed tropical hardwoods (timber from natural forests) will be used until then. (Jakarta Post 8/1/97, Suara Pembaruan 13/1/97, ANTARA 15/1/97)

East Kalimantan: paper and pulp production centre

The Kiani Kertas plant is but one of four major projects expected to start production in East Kalimantan this year. According to provincial forestry head, Heru Basuki, the four could produce a total of two million tons of paper a year.

The other plants are PT Adindo in Bulungan district (also owned by Bob Hasan); PT Sumalindo Lestari Jaya in Sanga-Sanga, and ICTI. They are also developing pulpwood plantations of 140,00 - 200,00- hectares.