OREANDA-NEWS. October 09, 2013. Asia Pulp & Paper Group (APP), through PT. OKI Pulp & Paper Mills, completes a USD1.8 billion loan transaction with China Development Bank (CDB) for the development of what will be Indonesia’s largest pulp mill, as the company said in the press release received by Lesprom Network.

The transaction is one of the largest ever single transactions between the two countries. The total investment in the new mill, located in South Sumatra, is USD 2.6 billion, most of which is funded through the CDB loan, with the remaining USD 800 million funded by capital raised by the shareholders.

The Government of Indonesia has declared Pulp and Paper as one of the priority industries in its National Industry Policy. It hopes that Indonesia will grow to be the fifth largest producing country by 2025, in line with the Indonesian Economy Acceleration and Development Expansion Masterplan.

The OKI mill will be constructed in an under-developed part of South Sumatra province and will have a projected annual capacity of 2 million tones of pulp and 500,000 tonnes of tissue. As is the case with all APP mills, PT. OKI Pulp & Paper Mills will only use plantation wood for its raw materials, and is committed to zero deforestation in its supply chain.

The OKI mill is projected to create 10,000 new jobs. The mill will use the most advanced environmental technology and standards available in the world today. Clean and self sufficient energy generated from the pulp production process and other production waste such as wood bark will power the mill.

Local South Sumatra authorities have estimated that the investment will increase South Sumatra’s export by more than 36%, or an overall GDP growth of 9%. The investment is also welcomed by local authorities because strategically the development will include supporting infrastructure that improves access to the remote area. Additionally, local communities will have opportunities to be employed locally instead of having to migrate to other areas to look for jobs.