Korean firm starts $20m project in Siak, Indonesia

South Korean company Global Logix Co. Ltd. is set to invest US$20 million in the construction of a wood pellet factory and a 10,000 megawatt (MW) biomass power plant in Siak, Riau Province reports the Jakarta Post. Siak is a regency (kabupaten) of Riau Province, on the island of Sumatra, Indonesia.

Executives of the South Korean company met with officials from the Siak regional administration to discuss the venture on Wednesday.

“We just signed a memorandum of understanding [MoU] with Siak administration for processing oil-palm fruit bunches and kernel shells, which, so far, have not been used optimally,” Global Logix chairman Myong-Ho Cho said on Wednesday.

According to Cho, the wood pellet factory would process bunches and kernel shells into pellets. It is expected that the factory will produce 10,000 tons of pellets from 60,000 bunches and 20,000 tons of shells, which is the waste generated from nearby palm plantations every month.

Meanwhile, the 10,000 MW biomass-fired power plant would need 3 tons of oil-palm bunches per hour, he said.

PT Siak Pembangunan dan Energi, a company run by the Siak administration, will supply Global Logix with the waste from the oil-palm plantations.

There are a total of 287,065 hectares of oil-palm plantations in the Siak regency, with 20 palm oil factories in operation, producing 928,323 tons of oil-palm bunches per year.

The regency is considered suitable for the investment due to the presence of Tanjung Buton Industrial Estate (KITB) and a seaport in Riau.

“If nothing gets in the way, and with full support from the regional administration, we will start construction in April and will start to operate in January 2016,” Cho said.

Meanwhile, Riau Governor Djohermansyah Djohan said the administration fully supported the plan and would facilitate the realization of the agreement.

South Korea has seen an increase in pellet consumption, with 2013 figures estimated at 500,000 tons, compared to 174,000 tons in 2012.

South Korea is currently looking for biomass sources overseas, including in Indonesia, as the East Asian country is enforcing a 2012 energy policy mandating firms to resort to renewable energy to cut carbon emissions.