The Development of Kuala Tanjung Industrial Port Copyright Kuala Tanjung Project Organization
Indonesia s maritime ambitions/maritime Policy - Kuala Tanjung is twice on the list of National Strategic Projects, as an international hub port and as an Industrial Estate - The President has announced the ambition to make Indonesia a Global Maritime Axis Maritime & Economic Policy Projects Tol Laut, Special Economic Zones, Port Projects Key Objectives Port Development Project Special Economic Zone (KEK) 1 Tol Laut (Pendulum Nusantara) Improve domestic and international connectivity through more competitive ports Promote development of value-added industries to capture more of the value of Indonesia s raw materials Support economic growth outside of Java There have been 24 port development projects announced with Kuala Tanjung selected as an international hub port along the Tol Laut The RI gov. has also identified at least 9 economic zone development projects aimed at developing industry of which Sei Mangkei is one of them Projects expected to cost around USD 55 billion 2
Vision Developing Kuala Tanjung into a world-class international hub port requires developing it as an integrated industrial port complex 1 Current Situation Scattered stand-alone facilities 2 Goal Integrated port with value-added activities Domba Mas (inactive) MPT (under construction) Petrochemical s Breakbul k Tank storage Containers Wilmar Inalum Inalum Power plants Stand-alone facilities Single-user port infrastructure No common utilities Handles mostly alumina, aluminum, and palm oil generated by Inalum and Wilmar Integrated industrial-port complex Common multi-user infrastructure and utilities Specialized third-party terminal operators and logistics providers Handles multiple cargoes and hosts diverse industries Developed from an integral perspective with regard to Sei Mangkei and Belawan, in which each location has its own specializations. 3
Strategy Developing Kuala Tanjung will require attracting gateway volumes and developing industrial clusters to attract transhipment 1 N. Sumatra gateway 2 Exports and imports from/to N. Sumatra especially Medan and Gateway Industrial Sei Mangkei 1 2 Main effect: lower logistics costs 3 Transshipment Major port-industrial complex Large-scale industry clusters that benefit from being close to trade lanes and port infrastructure Main effect: valueadded production that generates many thousands of jobs 3 Eventually: a transshipment hub Transshipment of containers and bulk goods Main effect: Econonies of scale and connectivity, triggered by the cargo volumes generated by the industrial gateway port 4
Landlord model The port industrial complex will be developed and managed by the Port Development Company according to the landlord model A new model to capture the potential A new way of managing the port With a Port Development Company that manages the area as a whole...... with world-class global players and SOEs as tenants who do what they do best: operate terminals and run industries International standards of planning, safety, stakeholder management and environmental management
Strategic location on the Malacca Strait Malacca Strait ports have experienced strong growth but Indonesian ports are lagging behind their Singaporean and Malaysian neighbours 1 Strategic location on Malacca Strait 2 near the heart of N. Sumatra s economy major port > 1 mn. tons Belawan Tk. Ewa Kuala Tanjung Small ports < 1 mn. tons Penang Port Klang Port Dickson Johor Dumai Singapore Tg. Pelepas Tg. Uban Pekanbaru Batam N. Sumatra GDP by Regency (2015) Unit: IDR trn. (at Constant 2010 prices) Langkat Medan Deli Serdang Karo Belawan Serdang Dedagai Simalungun Asahan Kuala Tanjung Batubara Labuhan-Batu Utara Labuhan-Batu Labuhan-Batu Selatan 50 25 50 10 25 < 10 Muara Sabak Kuala Tanjung offers deep natural draft (18 metres) on the Malacca Strait Indonesia has many small ports handling less than 1 mton 30% of global trade and 15% of the world s crude oil and petrol products pass through the Malacca Strait Kuala Tanjung is in Batubara regency, 120 km from Medan on the northern coast of N. Sumatra 80% of N. Sumatra s GDP is concentrated within a 200 km radius of Kuala Tanjung 6
Industrial Potential 8 segments were analysed and prioritised based on potential impact 1 High Impact High Priority Segments 2 Medium Impact Medium Priority Segments Segment Description / Rationale Segment Description / Rationale Petrochemical s Petrochemicals are ideal for ports because they: Require lots of space and infrastructure Generate large captive cargo volumes Generate lots of jobs and investments They can facilitate development of other activities (i.e. trading, bio-based chemicals, plastics, etc.) Rubber N. Sumatra is a significant natural rubber producer The natural rubber can be used as feedstock for a variety of industries Rubber activities, however, don t generate large cargo volumes or significant demand for port infrastructure Metals Energy Metals are ideal for ports because they: Require lots of space and infrastructure Existing aluminium production of Inalum Generate very large captive cargo volumes Generate thousands of jobs and billions in long-term investments They can attract shipbuilding and auto manufacturing Industry needs energy creating the conditions to attract other industries to the port Energy can generate large captive cargo volumes and synergies with third party terminal operators Automotive Food / Beverages Automobile manufacturing can create demand for space and significant cargo volumes but it also requires that the supply chain be in place and a significant captive market Agricultural production and urban demand create conditions for food and beverages This segment, however, does not generate significant demand for infrastructure or space Cargo volumes also tend to be modest and are unlikely to make or break the project Cement Cement production is able to utilise waste products from steel manufacturing Cement production is an energy intensive process that benefits from being close to other industrial activities (i.e. energy, steel production) It can generate steady bulk volumes for a port Palm Oil N. Sumatra is the 2 nd largest palm oil producer in Indonesia but the Sei Mangkei Special Economic Zone is already targeting this segment Palm oil creates opportunities for downstream activities including cooking oil and soaps among others Cargo volumes are modest 7
Scenario Forecasts There are 2 ways to make Kuala Tanjung big through industry or transhipment Scenario Forecast Overview Unit: mn. metric ton 6% #% CAGR Main Assumptions 200 Historical Industry Max 17% 6% GDP growth Metals cluster: aluminium, steel Petro cluster: refinery + downstream Energy cluster with 1,750 MW capacity Container and liquid bulk transhipment 150 100 High Transhipment 13% 4.3 % GDP growth No industrial clusters only existing industries plus power and cement plants Maximum 5% transhipment market share after 2030 50 Base 11% 4.3% GDP growth No industrial clusters only existing industries plus power and cement plants Kuala Tanjung captures a 1% market share of the Malacca Strait transhipment market starting in 2030 0 2000 2010 2020 2030 2040 2050 Business as Usual 8% 3.9 % GDP growth No industrial clusters only existing industries No transhipment Growth largely relies on overflow from Belawan 8
180 million tonnes of throughput require 2300 ha of land Market Segment Throughput forecast by 2050 (Mton per year) Spatial demand (ha) Remarks (type of cargo / industry / use) Zoning map Liquid Bulk 30 110 Fuels, crude oil, refined products Terminal Dry Bulk 25 50 Coal, clinker Terminal Break Bulk 5 60 Breakbulk terminal Terminal Containers 120 310 Container terminal Terminal Maritime Services N/A 10 Tugs, pilots, bunkering, mooring assistence, etc Light Industry N/A 255 Warehousing, offices, distribution centers, service providers Heavy Industry N/A 930 Refinery, steel manufacturing, power plants, cement production, etc Public Space N/A 575 Road, rail and pipeline corridor, breakwater, public space, green Total 180 2.300 Terminal Light Industry Heavy Industry Public Space 9
Conceptual layout Port and Industrial Area 10
Phasing of the Development - Phase II Launching development Establishment of a thermal power plant and a cement factory PHASE II (1) SUMUT 2 cluster : 20 Ha (2) Coal Storage cluster : 20 Ha (3) Cement cluster : 7 Ha (4) Expansion for cement : 15 Ha Construction of a 50m wide breakwater: Separate the seawater intake and outfall thereby limiting recirculation. Provide access to the coal and clinker unloading jetties Provide a sheltered area for marine services berths and future break bulk, container and smaller dry and liquid bulk vessels (2) (1) (3) (4) Proposed Corridor Existing Corridor Breakwater will extend to about the - 10mCD contour to minimize construction costs 11
Phasing of the Development Final Phase Flexible future development depending on market demand Construction of the breakwater, together with additional jetties for handling dry and liquid bulks Jetty Reclamation for additional container terminals Accommodating industries in the appointed area(s) Container Terminal Area Acces Channel. On client(s)request the accessibility can be improved by dredging (and maintaining) an access channel up to - 26mCD Bakrie Area Wilmar Area PMT Area Inalum Area (Heavy Industry) Dry Bulk Terminal Area Liquid Bulk Terminal Area Light Industry Heavy Industry railway and road connection River diversion & Drainage 12
Investment Cost Total investment costs are estimated around USD 2,856 (price base 2017). The investment costs concerns the following components: Description Cost estimate (USD M, pp. 2017) Breakwater 417 Land Reclamation 816 Dredging 745 Quay Walls 649 Onshore Land Improvement 97 Roads & Drainage 76 Bah Bolon River Diversion 57 Land Acquisition/Resettlement (excluded) 0 Total Investment (pb. 2017) 2,856 Breakwater Land Reclamation Dredging Quay Walls Onshore Land Improvement Roads & Drainage Bah Bolon River Diversion 13
Institutional model for Kuala Tanjung integrated port and industrial zone development Min. of Transport Shareholders Port Concession Pelindo I Strategic Partner Min. of Industry Harbor Master JV Port Management Co. Utility Providers Marine Service Providers Industry Port Area Tenants Logistics Port Users Shipping Lines & Agents Cargo Owners 14
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