Opportunities and Challenges the Kijing Terminal Will Face

By: Harijanto, Executive Director of Himpunan Masyarakat Peduli Maritim

Kijing Terminal, at Mempawah Regency, West Kalimantan, is now under construction by state port operator PT Pelabuhan Indonesia II (Persero)/IPC (Indonesian Port Corporation). This terminal targeted to start operation in the second half this year is expected to handle loading/unloading of containers, dry bulk, and liquid as well. Such a breakthrough and a very strategic step of IPC. Hopefully, this will trigger the trade and economy growth of the province and for corporate business expansion.

The potencies of the province – plantation and mining products in particular – have attracted IPC to do investment. This province is very potential for further development in plantation and mining.

“West Kalimantan is the biggest CPO (crude palm oil) producer in Indonesia,” West Kalimantan Governor Sutarmidji said in Indonesia Visionary Leader (IVL) Session 5, at Auditorium Gedung Sindo, Menteng, Jakarta, Wednesday, October 16, 2019. In addition to CPO, bauxite and rubber are also some leading products for the economy of this province. Export of bauxite reaches 2 million tons a year.

Promising Market of CPO, Bauxite

CPO. West Kalimantan total area for palm plantation is 1,455,182 hectare (ha), nationally the third after Riau (2,430,508 ha) and north Sumatra (1,445,725 ha). This province has 70 CPO fabrics, producing more than 3.39 million tons/year, contributing around 10% of national products. Indonesia CPO is promising. January’s CPO price at Malaysia’s derivative stock exchange was closed at MYR2,571/ton, up 16.28% year on year, Bloomberg reported.

CPO issuer potentially will up until the end of this year, according to Jesica Sukimaja, analyst at Research Associate MNC Securities, thanks to potential demand increase from India following the trade agreement between the two governments. Indonesia will cut sugar import duty from India, from 10 to 5%. On the other hand, India will import more CPO from Indonesia.

In addition, the government policy to increase quota of fuel contained CPO will encourage CPO price higher and higher. Good to know that government has programmed to develop B20 to B30 in January and into B50 by the end of this year (2020).

Kijing Terminal is designed to serve CPO. IPC expects in the first year of operation, this terminal can handle 4.6 million ton. The projection refers to the production of 70 PKS in West Kalimantan with total production reaching 3.39 million ton/year.

In view of the CPO price hike, more PKS will be developed. PT. Wilmar’s subsidiary PT. Energy Unggul Persada (PT EUP) has just built 6 CPO storages next to Kijing Terminal. According to the plan, the operational of PT.EUP storages will run under cooperation with Kijing Terminal, including installation of 3.5 Km piping system connecting the storages with trestle. It will also be equipped with loading point facilities with pumping capacity reaching 300 ton per hour.

We appreciate this IPC’s step to take the CPO market potency. The loading unloading process is simple, absorbing lower labor. Benchmarking with other ports of Dumai, Belawan, and Teluk Bayur having earlier handled CPO, Kijing process is more promising

In 2019 Dumai and Belawan handled 4.7 and 3.2 million-ton CPO and CPO related products, respectively. The two ports have integrated facilities connecting wharves with CPO storages. They have 84 piping channels in total, 6 loading point with total pumping capacity of 500 ton per hour.  Teluk Bayur export meanwhile, reached 2.2 million tons.

Bauxite. Indonesia has planned to build alumina refinery since years ago, in a bid to self-handle bauxite processing into alumina. Up to now, the processing is done in the other countries. Indonesia exports bauxite and import alumina, then processing it to be aluminum. After building refinery, Indonesia is be able to produce alumina with production capacity reaching 1 million tons/annum. No need to import alumina anymore.

Up to now Indonesia has two refineries. The biggest is PT. Well Harvest Winning (WHW) Hongkong. Located at Kendawangan, Ketapang, PT WHW is the first Indonesia’s smelter grade alumina (SGA) refinery and the biggest in South East Asia with production capacity of 1 million ton per annum.

After WHW, Indonesia has refinery of PT Borneo Alumina Indonesia (PT BAI), subsidiary of state-owned Enterprise (SOE) PT Indonesia Asahan Aluminium (Persero)/INALUM and PT ANTAM Tbk. PT BAI is operator of SGA Refinery with production capacity of 1 million ton/year. This is a very strategic investment, especially for processing bauxite into alumina. This is also to bridge the ANTAM’s bauxite production at the upstream site (Mempawah) and INALUM aluminium production at the downstream (Asahan).

 

PT WHW, a foreign investment, has its owned terminal for loading/unloading, while PT.BAI refinery does not, expecting Kijing Terminal will handle its loading/unloading. This is a promising opportunity, of course, for IPC, so is for PT.BAI. The alumina will use mobile tank and then shipped by barge to Inalum at Asahan. Kijing Terminal will be benefitted from the cargoes of 1 million ton of alumina per year, and will get more if the yearly production is increased.

Kijing Port Design

Container Market Not Promising

If operation, this terminal expects to handle 561,000 TUES in the first year of operation, while Dwikora Pontianak throughput is less than 300,000 TEUS a year. The trend was positive in 2015-2018, but it was down in the last year (2019).

Container throughput realization

Dwikora Port Pontianak

 

Year Throughput (TEUS)
2015 188.079
2016 209.520
2017 244.485
2018 277.887
2019 262.880

 

The data shows that the growth of container at Pontianak (Dwikora Port) is so slow, even decreased in the last year, from 277,887 (2018) to 262,880 (2019). Referring to this port throughput growth, it is so hard for Kijing Terminal to reach targets of 561,000 TEUs.

Further, North of West Kalimantan, including regions of Mempawah, Singkawang, and Ketapang contributes only 20% of total container throughput of the existing terminal of Dwikora Port, Pontianak.

Kijing Terminal will also face bottlenecks from access road. The width of 80km Kijing-Siantan road is only 6 meters, while containers required 8m-wide road, or at least 7.5 meter. So, the road needs for widening, but it will cost high cash.

Government of Mempawah Regency planned to widen the Tugu Tani – Raden Kusno – Makam Pahlawan, costs Rp 55 billion, according to Mempawah Regent Hj Erlina. But, it is only 5km. To finance the 75km road widening require more tah Rp 4.1 trillion. The provincial government has claimed to build toll road of 145km connecting Pontianak with Singkawang, but no one knows when it will be realized.

Another problem for Kijing is that the most potential hinterland of the province is located at Pontianak. Relocating the industries and offices will cost higher and might be an unfavorite option. The plan for special economic zone (SEZ/KEK) at Mempawah also needs further analysis on how this will attract business players. Lesson learned from Kuala Tanjung KEK with lower interest from investors. However, the opening of industrial zone around Kijing Terminal to trigger new CPO fabric is absolutely prospective.

In conclusion, the containerized cargo has not been promising for Kijing Terminal. Though in view of business the container handling will create much income, but it also needs high investment both in building port infrastructure, facilities procurement, and development of access road that can support flow of containers.

And what is the most important is that the availability of cargoes. Lower containerized cargo availability will discourage investor and business players to do business.

 

 

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