S. Sulawesi to build $297m integrated corn plant

The Jakarta Post , Gowa, South Sulawesi,  Thu, 11/13/2008

A Korean investment firm plans to build a multi-function corn processing plant in Gowa, South Sulawesi, with an investment of US$279 million in a project that it says will benefit local farmers.

The plant will be able to output packed corn grain as well as pulp and paper, compost and biogas.

Project investor Korea Business and Economic Corporation signed a memorandum of understanding (MoU) with the South Sulawesi provincial administration and the Gowa regency administration Wednesday.

Construction will be carried out by the firm's subsidiary International Resource and Energy Development (IRED).

The MoU states the plant will consist of three factories.

The first factory will have a corn processing warehouse, corn drying silos, a granary and a packing and export warehouse.

The second factory will produce pulp and paper from corn cobs and branches while the third factory will produce compost and biogas from corn leaves, roots and skins. The biogas will be used to generate electricity.

The MoU, signed by IRED president Ring Song Soo, South Sulawesi Governor Syahrul Yasin Limpo and Gowa Regent Ichsan Yasin Limpo, will be followed up by a cooperation agreement valid for 25 to 30 years.

IRED director Mr. Moon said the plant was purely an investment, but that its operation would depend on a cooperation with local farmers to supply corn.

"Gowa has been chosen for the project site because it is the most strategic place for the project," he said.

"The regency is close to Makassar so it is close to Soekarno Hatta Seaport. Gowa also has a large area of corn plantations and a large harvest so we have a guaranteed supply of raw materials."

Regent Ichsan said his administration had prepared an area of 250 hectares on Gowa Industrial Estate (Kiwa) for the factories. The project is expected to encompass 15,000 hectares of corn farms.

Ichsan said the regency produced some 176,000 tons of corn per year and that the project would only require 97,500 tons of corn, leaving room for other investors to tap the abundant corn supply.

The regent also said the Gowa administration would task a regency-owned company with cooperating with farmers to harvest the corn.

"The company will then deal with the investors. The cooperation is purely business," he said.

It is estimated the plant will employ more than 45,000 people, 5-10 percent of them Korean expatriate workers.

Governor Syahrul, who is Ichsan's older brother, said he expected the project to be consistent with the investor's claims as South Sulawesi had a large corn production.

Corn production in the province is expected to reach 1.5 million tons next year.

Currently, South Sulawesi sends corn to other regions as cattle feed and for export.

"As we are boosting our corn production, we hope more investors will be willing to construct processing plants in South Sulawesi and export the products as the price is higher," Syahrul said.

"This will benefit the farmers more."

However, it is unclear when the plant will become operational as construction is pending a cooperation agreement between the investor and the Gowa administration.