Tadmax’s JV to build Papua timber complex

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TADMAX Resources Bhd on Friday announced the formation of a joint venture company to establish an integrated timber complex in Papua, Indonesia.

While it is hardly an exciting announcement that will move the markets, Tadmax chief executive officer Datuk Faizal Abdullah said it was among the most important ones the company has ever made.

“This JV has the potential to change the dynamism of the company,” Faizal told Business Times in an interview.

The company is optimistic that over a six-year period, timber extraction could generate an accumulated profit of about RM190 million.

Faizal said the JV partners were working on the financial details of the project, such as the amount and the pace of investment.

“Give us a month or two and we should have a clearer picture on the investment size and so on,” he added.

“Take a close look at the names involved in the JV. These are not names that appear in a JV for the sake of appearance. These are serious names, associated with success,” said Faizal when asked why investors should take the JV announcement seriously.

According to the Bursa Malaysia announcement, the shareholders of the proposed joint venture company, Tulen Jayamas Sdn Bhd, are Bumimas Raya Sdn Bhd with a 50.5 per cent stake; Pacific Inter Link Sdn Bhd (25.5 per cent stake), Al Salam Bank Bahrain (eight per cent) and Yakima Dijaya Sdn Bhd (two per cent).

Tadmax will have a 14 per cent stake in the venture, the filling to the stock exchange show.

Bumimas is linked to Tan Sri Ling Chiong Ho, who controls two public-listed companies here, namely Shin Yang Shipping Bhd and Sarawak Oil Palm Bhd.

Tan Sri Yee Meng Seng of Yakima, according to Faizal, has been active in the logging business in Papua since the 1990s.

Pacific Interlink, meanwhile, is a unit controlled by the Hayel Saeed Anam Group, one of the biggest conglomerates in West Asia.

The company also has some 160,000ha of concession land in Indonesia, located near Tadmax’s own concession.

Tadmax has 80,000ha of virgin jungle land concession in Papua, with approval for oil palm planting.

“Setting up the integrated timber complex is important for us as under Indonesian law, exports of logs are forbidden.

“As such, we will have to clear the land, throw away the logs, pay the authorities royalty for felling the trees, and then plant oil palm on the cleared land,” said Faizal.

He said with the timber complex, the logs could be used to produce plywood, veneer and woodchips.

He added that if everything went as planned, Tadmax would be able to churn a revenue of between RM30 million and RM45 million next year.

“Hopefully, we will make a small profit in 2013. Over a six-year period, timber extraction alone can generate an accumulated profit of about RM190 million,” noted Faizal.

Business Times : nation

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