Acasia tree planting in East Kalimantan 'encouraging' amid high paper prices

Nurni Sulaiman and Hyginus Hardoyo , The Jakarta Post , North Penajam Paser, Jakarta | Sat, 07/05/2008 12:21 PM | Business

To take advantage of high prices of pulp and paper, PT ITCI Hutani Manunggal (IHM) and PT Adindo Hutani Lestari (AHL) are aggressively growing acasia trees to supply pulp and paper mills.

IHM, which is partly owned by state forestry firm PT Inhutani I, holds 161,127 hectares in forest concessions in North Penajam Paser and Kutai Kartanegara regencies in East Kalimantan.

AHL's concession areas are in four regencies: Bulungan, Malinau, Tana Tidung and Nunukan.

IMH general manager Armadani said the company would spend Rp 1 trillion (US$109 million) over the six-year growth-period leading up to harvest, beginning with land clearance, cultivation and maintenance.

IHM managing director Mohamad Helmi said: "The forest industry is labor and capital intensive indeed, but we believe it has a very bright prospect thanks to the rising price of paper and pulp globally."

As of May, the company had 68,000 hectares of acasia tree plantations.

Of the total fund, 80 percent will be allocated for the seedling process, with the assumption that one hectare of tree plantation will cost between Rp 8 million and Rp 12 million.

One hectare of acasia trees can yield up to 145 tons of wood after a 5-year maturing period and 170 tons after six years.

A ton of pulp can usually be derived from five to six whole logs.

"A ton of acasia timber is priced at between Rp 450,000 and Rp 500,000.

"So IHM could reap Rp 65 million to Rp 72 million from each hectare of acasia after a 5-year mature period, and Rp 76 million to Rp 85 million after six years," IMH public relations manager I Made Suarjana said.

IHM sells its harvests to paper mills in Kalimantan, Java and Sumatra, including to Riau Andalan Pulp and Paper in Riau and Kertas Nusantara (formerly Kiani Kertas) in Berau, East Kalimantan.

Suarjana said IHM had also signed a contract to supply logs with PT Kutai Chip Mill in Balikpapan, East Kalimantan.

Kutai Chip Mill director Eddy Hutarson said the chip mill would commence operation in September and process the timber for export to Brazil, China and Finland among others.

IHM was established in 1993 as a result of a joint-venture between PT ITCI Kartika Utama (PT ITCIKU) and PT Inhutani I.

In 2006, PT Kreasi Lestari Pratama bought a 60 percent stake in PT ITCIKU and a 30 percent stake in PT Inhutani. IHM is now 90 percent owned by Kreasi and 10 percent by Inhutani.

IHM employs 350 permanent workers and 3,000 contract workers for land clearing, plantation and harvesting.

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