The Musi Pulp Mill Project - located in southern Sumatra - was conceived to help meet the increasing global demand for paper. The plant has an annual output capacity of 450,000 tons of kraft paper pulp, produced from a sustainable plantation of fast-growing Acacia Mangium trees.

The turnkey contract was awarded to Klockner Industrie-Anlagen GmbH of Duisburg, Germany - a member company of the RWE group, which ranks among the ten largest corporations in Germany.

Klockner-INA executed the project under a EPIC contract covering Engineering, Procurement, Installation and Commissioning. During a recent reorganization of the Group's activities, Klockner-INA was renamed TESSAG-INA.

Klockner delivered the project in conjunction with major conractors:

Klockner Stadler Hurter (KSH) of Canada
Ahlstroem Machinery Corp. of Finland
Kvaerner Pulp and Paper (Power Division) of Sweden/Finland
Valmet of Finland
Sunds Defibrator AB of Sweden

TESSAG-INA is represented in high-growth markets, particularly in Asia, by well established agencies and subsidiaries in China, India, Indonesia, Japan, Malaysia, Singapore, Thailand and Vietnam.

Funding for the project was finalized in Jakarta on March 12th 1997, with the signing of the loan agreement between PT. Tanjung Enim Lestari (PT.TEL) and a group of 25 foreign International banks. The financing was in the form of export credits from Germany, Canada, Finland and Sweden. The German financing was arranged under the lead of the Kreditanstalt fur Wiederaufbau (KfW) in Frankfurt, in cooperation with IKB Deutsche Industriekreditbank AG, Dusseldorf. The Export Development Corporation (EDC) arranged the Canadian finance package. Additional commercial funding was lent by, among others; The Fuji Bank, Merita Bank Ltd., AT&T Capital Corporation, Korea First Bank and Sakura Finance Asia Ltd.

The transport contract, covering all construction equipment and materials was awarded in October 1997 to Hansa-Meyer Transport GmbH - a member of the HEGO group of companies. Hansa-Meyer carried out the

project in conjunction with their local partner, PT. Serana Penida. Over the course of the following two years, Hansa-Meyer and its partners fully met the requirements of Klockner-INA's tight construction schedule, despite the economic and political difficulties which erupted over that period.

Klockner-INA formally handed over the completed plant to PT. Tanjung Enim Lestari in November 1999.

Well prior to completion of the plant, off-take agreements had been signed with Marubeni Corporation and Cellmark of Sweden. The entire output of the Musi Pulp Mill is exported, generating important foreign exchange income for Indonesia