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2. THREE PRIVATE INVESTORS WILL DEVELOP BUTON ASPHALT INDUSTRY.

Three investors - PT Olah Bumi Elcipta, PT Hutama Prima, and PT Multi Eka Karma - planned to develop Buton asphalt (Asbuton) processing industri worth Rp 19.3 billion. By using new extraction technology, Asbuton will be converted into pure bitumen and impure bitumen which will produce Retona bitumen 60, 80, 100, and BE 60 and BE 70. The product made of natural asphalt is suitable for road building and other uses.

Under another tie-up which was inked recently, PT Olah Bumi Elcipta will mine, process, and market Asbuton in Lawele, island of Buton. And together with PT Hutama Prima, Nissho Iwai Corp, Niigata Eng. Co. Ltd., and the provincial government of Southeast Sulawesi an extraction factory will be set up capable of producing 225,000 tons per year. And cooperation with PT Multi Eka Karma another extraction factory will be built which will be capable of producing 100,000 tons per year.

Investment needed to build the 1.7 million-ton a year Asbuton processing plant in Lawele is Rp 15 billion, while investment for developing the 600,000-ton a year factory in Kabungka is Rp 4.3 billion. It is estimated that by the year 2000 production capacity of the three companies will reach 1.9 million tons per year.

According to director of technics of Directorate General of Road Building, the reopening of Asbuton is due to its finer quality compared to oil asphalt. In addition, it will satisfy the growing domestic demand. It is estimated that annual domestic demand amounted to 1.2 million to 1.5 million tons, while Pertamina asphalt production amounted to only 700,000 tons per year.

Until now Asbuton is operated by Directorate Technics, Directorate General of Road Building, in cooperation with PT Sarana Karya, one state-owned enterprise under the auspice of Ministry of Public Works. But the asphalt produced has not been optimized because of its form (like earthen lump), and because it is more difficult to use Asbuton than with oil asphalt.

To upgrade the quality of Asbuton PT Sarana Karya cooperated with several private national companies to build extraction plants. For example, with Pt Amerta Margayasa, it will transform Asbuton into extra fine "Micro Asbuton" with homogeneous asphalt content and relatively small moisture. It will also produce Butonic Mstic Asphalt (BMA) in solid form with high asphalt content.

Prior to this, PT Hutama Karya through PT Hutama Prima had planned to set up an emulsified asphalt plant with an investment of Rp 12 billion. It is a joint venture between PT Hutama Karya (30%) and PT Prima Performa Yasa (70%). The project which will be located in Cilacap, Central Java, will be able to produce 250,000 tons of emulsified asphalt a year. It is scheduled to start production in August 1999 and its entire production will be marketed locally.

Production increases by 1.7%

Asphalt is a basic element for road hardening, roof coating, roofing, and dam roofing. Besides being produced from mining in Buton island, it is also produced by several Pertamina oil refineries, such as those in Pangkalan Brandan and Musi in Sumatera, and in Cilacap (Central Java).

Sources at the Ministry of Mines and Energy said Pertamina asphalt production fluctuated with the tendency to increase. Peak production was reached in 1992 - 3.4 million barrels or up 10.4% from the previous year. In the following year it continued to decline. In 1995, asphalt production by Pertamina oil refineries decreased by 6.3 % to merely 3 million barrels. In 1996, Pertamina asphalt production increased by 10.1% to 3,306,000 barrels. In the last six years its production grew by an average of 1.7% a year.

Import diminishing

Besides being satisfied by domestic supplies, demand for asphalt is also supplied from overseas. But in recent years the role of import is diminishing. In 1991, Indonesia asphalt import amounted to 4,351 tons worth US$ 1.2 million. In 1995, import fell by 55.5% to merely 485 tons than that of the previous year. It was presumed that the fall in asphalt import was due not only to local supply but also because the quality of imported asphalt was inferior than that of local product.

Indonesia's imported asphalt came from several countries. USA was the major supplier. In 1995, USA supplied 364 tons or 75.1% of the total import which was 485 tons. Other supplier countries were Singapore and Britain. In the same year the two countries supplied 118 tons of asphalt to Indonesia with a total value of US$ 138,000.

Table - 1

Asbuton extraction plan by each company, 1998 - 2000
Name of company 1998 1999 2000

-PT Bina Sarana Eka 25,000 300,000 350,000
-PT Hutama Prima 112,000 562,000 900,000
-PT Olah Bumi Elcipta 144,000 360,000 720,000

Total 281,000 1,222,000 1,970,000



Source: Department of Mines and Energy/Data Consult

Table - 2

Pertamina's asphalt production, 1991 - 1996
Year Production Growth
 (000' barrel) (%)

1991 3,094 -
1992 3,415 10.4
1993 3,347 -1.9
1994 3,224 -3.7
1995 3,003 -6.3
1996 3,306 10.1

Average growth 1.7



Source: Department of Mines and Trade/Data Consult

Table - 3

Indonesia's asphalt import 1991 - 1995
 Volume Value
Year (tons) (US$ '000)

1991 4,351 1,224
1992 2,084 1,427
1993 995 1,146
1994 1,091 1,073
1995 485 706
1996 3,343 2,605



Source: CBS/Data Consult
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Publication:Indonesian Commercial Newsletter
Date:Aug 11, 1997
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