Post on 23-Feb-2016
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Indonesia’s Pulp & Paper Industry:Trends, Risks, Opportunities
Christopher BarrWoods & Wayside International
21 October 2010
Indonesia’s pulp & paper sectorRapid expansion since early-1990s
2010 BHKP capacity = 7.1 million Adt/yr
2009 BHKP production = 5.97 million tonnes
→ export volume = 2.6 m tonnes (2008)
→ export value = US$ 1.4 bn (2008)
2009 paper and paperboard production = 9.36 million tonnes
→ export volume = 3.1 m tonnes (2008)
→ export value = US$ 2.7 bn (2008)
Major pulp mills in Indonesia
APP/Sinar Mas GroupPulp Capacity:
• Indah Kiat (Riau) = 2.3 Adt/yr• Lontar Papyrus (Jambi) = 800,000 Adt/yr
Integrated with pulp and paper production in Indonesia and China
35 plantation concessions cover 2.3 m hectares in Riau, Jambi, S. Sumatra, W. and E. Kalimantan
APRIL/RGE Group (formerly RGM)Pulp Capacity:
• RAPP (Riau) = 2.9 Adt/yr• Toba Pulp (N. Sumatra) = 200,000 Adt/yr
Integrated with pulp and paper production in Indonesia and China
28 plantation concessions cover 1.2 m hectares in Riau, N. Sumatra, and E. Kalimantan
Heavy investments in Acacia plantations
… but significant sustainability risks
• Conversion of natural forests
• High carbon emissions
• Conflicts with local people
Conversion of natural forests
High carbon emissions, esp. on peat
Tenure conflicts with communities
Growing pressure to respond to sustainability concerns …
• NGO campaigns
• Buyers seeking responsible sources
• Climate change --Norway-Indonesia LOI
But capacity expansion is also underwayMinistry of Forestry’s promoting US$ 15 bn of investment in new capacity by 2020:
• Pulp capacity to 16.0 m tonnes/yr
• Paper and board capacity to 18.5 m tonnes/yr
• 9.0 million hectares of plantation concessions already allocated for conversion
Key point: If pulp capacity expands to 16 million tonnes/yr, annual wood demand will grow from 29 m m3/yr to 72 m m3/yr
Many new mill projects are ‘planned’… not all will be built
Source: Verchot et al. (CIFOR 2010)
APP and APRIL expansion in China
• APP Hainan mill has 1.2 m Adt/yr of BHKP
• APP now building new mill with 2 APMP lines in Guangxi
• APRIL Rizhao has 1.3 m Adt/yr
• Both APP and APRIL import wood chips from Indonesia to fill fiber shortages in China