A consortium comprising three timber companies has taken over a failed pulp and paper mill project in Bintulu, Sarawak, estimated to cost US$1.5 billion.

In a press statement, the Sarawak government announced that it signed two contract agreements with Grand Perfect Sdn Bhd last Thursday for a large-scale 'greenfields project' that will supply raw material to the mill.

The company represented a consortium comprising KTS Timber Industries Bhd, Samling Strategic Corporation Sdn Bhd and public-listed Ta Ann Holdings Bhd.

Sarawak forestry director Cheong Ek Choon signed on behalf of the state government, while Grand Perfect Sdn Bhd was represented by executive chairman Henry Lau, who is also the group managing director of the KTS Group of Companies.

The statement did not mention their respective equity, but said the two agreements are to establish and maintain "world-class tree plantations in the Bintulu region, to supply wood to the pulp and paper project on a sustainable basis".

Commitment to project

According to the statement, good forest management practices, latest technology and knowledge in the fields of forest research and genetics of tree crops will be employed in the establishment and management of the plantations.

The state government said it was committed to implementation of the project which is expected to lead to significant social and economic development and diversification.

An area of about 200,000ha of logged-over forest land in Bintulu had been given to the Sarawak Pulp and Paper Sdn Bhd, in which Asia Pulp and Paper (APP) Pte Ltd had initially held a majority stake. The state government held the rest through the Sarawak Timber Industry Development Corporation.

According to previous reports, about 5,000 hectares had been planted with trees and the company had drawn down a RM100 million bank loan to finance the tree plantation.

The project, including the setting up of a mill, was originally estimated to cost US$1.5 billion. APP was reported to have invested a total of RM200 million in it before work ground to a halt, because the company ran into financial difficulty.

Three months ago, a KTS company Gabung Trading Sdn Bhd successfully petitioned for the winding-up of Sarawak Pulp and Paper for money owing for work.

Foreign investors

The state government had also re-entered the land alienated earlier to Sarawak Pulp and Paper, after alleged breach of contract. It is believed that the consortium will take over this plot.

There was no mention in the statement if the consortium will put up the mill or if this is to be operated by a related company, with equity from both the public and private sectors.

Malaysiakini understands that the state government has been talking to prospective foreign investors, including those from China, on the possibility of their taking up equity in the paper and pulp project.

Meanwhile, the change in the status of lease of the plantation land and the winding-up of Sarawak Pulp and Paper has created a dilemma of sorts for some lawyers acting for aggrieved customary rights landowners affected by the mill project.

Lawyer Baru Bian told malaysiakini that three cases involving aggrieved landowners were pending in court.