BY: BAMBANG WIDYANTORO PT. INHUTANI III Indonesia – Korea Forum for Biomass Energy Gran Melia – Indonesia, September, 5 th 2013

 Background  Preparation for Establishment of Wood Pellet Factory  Obstacles  Effort to Accelerate  Conclusion

BACKGROUND BACKGROUND Presented by Bambang Widyantoro Indonesia – Korea Forum for Biomass Energy, Gran Melia, September 5 th 2013

Location Distance: 8O km from Capital City of South-Kalimantan (1.5 hours to the location) South Kalimantan

1. The partnership scheme of wood pellet industry was Joint Operation (approved by Minister of State Own Esterprise, No. S-34/ MBU.1/2012, January, 24 th 2012) between PT. Inh-3 and PT. SL Agro Industry. 2.The factory was inside the working area (approved by Minister of Forestry No. 358 /Menhut-II/2005), on the area of + 7 Ha, in Village: Sabuhur, Sub-district: Jorong, District: Tanah Laut, Province: South-Kalimantan. 3. Capacity of the factory was ton/year and demand raw material (small logs and wood-waste would be ton /year). Preparation of Establishment

Benefits: 1. Utilizing small logs (Ø < 15 cm) and wood-waste of HTI; 2. Producing green energy to reduce Green House Gas (GHG); 3. Encouraging to grow up other wood pellet industry and power plant in the local gov’t (remote area); 4. Absorbing man power and developing local gov’t and communities 5. Mutual beneficieris between the parties. Note: Korea Forest Service has signed MoU with Ministry of Forestry, RI for biomass energy in March, 2009, and Gov’t of South-Korea commited to reduce GHG until 11% in

1. Investment + Rp 42 miliar (US$ 4 million) for the capacity of tons/year 2. NPV US$ IRR 16,56 % by discount rate of 14,32 % 4. Form of cooperation : joint operation (JO) 5. Juration: 20 years 6. Feasible: technical, financial, and bankable

YEARANNUAL PLAN WOOD POTENTIAL ASUMPTION FOR WASTE (M3) HECTAR (HA) VOLUME (M3) Constructed Wood, Ø ≥ 15 cm (M3) Small Logs Ø < 15 cm (M3)

1. Export Port : Trisakti – Banjarmasin (South- Kalimantan), 80 km from the location; 2. Main country destination : South-Korea, and other countries (Japan, China, Europe & USA); 3. Main market: company of power plant in replacing coal utilization.

1. Kinds of trees containing high calory maybe not fit to the land; 2. Lands out Java are unproductive (average less than 100 m3/ha) and fully conflict of land use; 3. Long way to run the project (permit ‘license’ process, consortium with many campanies in South-Korea, etc); 4. High cost if using high quality machineries; 5. Low margin in wood pellet business.

1. One of the electricity power company in South-Korea for buying wood-pellet; 2. Depian for managing the project (Korean shareholder in SL Agro – Joint Operation with PT. Inhutani III); 3. K-Sure for insurance of the project; 4. KIS for making feasibility study; 5. SK for securing forest plantation; 6. Halla for EPC (Engineering, Procurement, and Construction); 7. IBK (Industrial Bank of Korea) for funding the project.

1. Selecting short rotation coppice which is in 2 years could be harvested and collaborating with local communities; 2. Planting trees are much more than HTI for constructed wood (minimum productivity is 200 m3/ha); 3. Being easy to get license for wood pellet industry because this industry utilize small logs and wood waste; 4. Quickly responding in making decision of the project (for the consortium if any); 5. Combining some machineries to reduce operating cost; 6. Taking place of the factory close to the location of HTI (maximum radius is 20 km and not too far from export port or max 100 km).

1. Industry of biomass energy (wood pellet) would be an alternative business for PT. Inhutani III in the future; 2. Raw material (small logs & wood waste) could be utilised to produce wood pellet to optimizing wood utilisation; 3. Accessibility of HTI becomes key point to reduce production cost; 4. Selection of machineries for producing wood pellet should be fit with the value of the product; 5. Continues and fixed market of wood pellet are very importance to absorb the product (need a political will); 6. Consortium is needed to strengthen the project only.

Save the World with Biomass Energy (e.g. Wood-Pellet)