PORT CORPORATION I, PTPN III AND PT. INDONESIA RAILWAY SIGN AGREEMENT FOR AN INTEGRATED HANDLING OF CPO AND ITS DERIVATES FROM SEI MANGKEI INDUSTRIAL ZONES

TO PORT OF KUALA TANJUNG

On June 12, 2010, PTPN III signed a Memorandum of Understanding (MOU) with Indonesia Port Corporation I and PT. Indonesia Railway for the support of the production process of Sei Mangkei Industrial Estate and the integrated handling of the products from the industrial estate. The signing was witnessed by the Minister of State Enterprise, Mr Mustafa Abubakar.

Indonesia is an agro-industries producing country, with Crude Palm Oil (CPO) and its derivates as one of its main products. In 2009, the CPO from Indonesia reached 21.5 million tons or 45% of world CPO production, of which about 40% passed through the port of Belawan in North Sumatra province and the port of Dumai in Riau province, which are managed by Indonesia Port Corporation I (Persero).

In North Sumatra region, CPO production reached 4.5 million tons per year as palm oil plantation grew at a rate of 14.58% per year. In anticipation of the CPO growth and in order to manage the downstream palm oil industry, PT. Plantation Nusantara (PTPN) III - one of the companies involved in the management of crude palm oil industry, has set up an industrial estate, the Mangkei Industrial Estate, located ± 140 km from Medan, the District of North Sumatra Province, Simalungun.

The industrial estate was set up to likewise integrate the development of upstream and downstream factories owned by PTPN III and downstream joint ventures factories, in the process increasing its efficiency and, eventually, its corporate value. To achieve its purpose and goal, Sei Mangkei Industrial Estate was provided with complete integrated facilities and infrastructure such as electric power, water supply, and waste and water treatment.

To carry out the MOU, Indonesia Port Corporation I has prepared Port of Kuala Tanjung for it to be able to accommodate the cargo from the Sei Mangkei Industrial Estate. For its part, Indonesia Port Corporation I will allocate from its port a 19-hectare area which will be provided with port facilities such as wharf, pipe racks and pipelines, land for tanks storage, rail way. It will also participate in loading and unloading CPO in the port area.

Furthermore, the planned development of a liquid bulk terminal at port of Kuala Tanjung will provide the following: maximum capacity of 2.4 million tons per year, wharf length of 200 m, trestle length of 2800 m, total capacity of storage tanks of 60,000 tons and 5 units the loading points. Currently, a study is being conducted and the coordination between Directorate General of Railways, Ministry of Transportation and PT. Indonesia Railway in discussing the plan of railway construction and emplacement of railways in the port of Kuala Tanjung is in progress. The development of the bulk terminal will commence in 2011.

The cooperation among Indonesia Port Corporation I, PTPN III, and PT. Indonesia Railway, so called inter-state owned company synergy, is expected to make the processing of the national export product - mainly crude palm oil, faster and more efficient.