Indonesia’s Pulp & Paper Industry:
Trends, Risks, Opportunities
Christopher Barr
Woods & Wayside International
21 October 2010
Indonesia’s pulp & paper sector
Rapid 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 Group
Pulp 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 underway
Ministry 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