Buton Island, located in south eastern Sulawesi, Indonesia, contains one of the world’s largest natural asphalt mines with a capacity of some 3.6 billion tons. Hong Kong project management company Gada Holdings Ltd is optimistic about the future demand of natural asphalt for infrastructure development and is actively developing asphalt mining and processing operations in northern Buton. In 2016, Gada established partnerships with several local asphalt mining companies and obtained exclusive rights to process their asphalt. The company introduced large-scale machinery and equipment from both overseas and the Chinese mainland, and has since provided technical support, handled asphalt processing and promoted sales overseas.
When Indonesian President Joko Widodo took office in 2014, he pledged to boost the country’s economic development and promised an increase in infrastructure spending. This has drastically raised domestic demand for asphalt in Indonesia, which is estimated to exceed 4 million tons per year. Compared to obtaining coal tar pitch or petroleum asphalt through the distillation of coal tar or crude oil, the excavation of natural asphalt does not involve chemical processes, making it an appealing option for Indonesia. Natural asphalt is water resistant, recyclable and more durable after paving. In March 2016, the Sulawesi Provincial Government passed legislation that requires the use of at least 50 per cent of Buton asphalt in all new road constructions, and the sole use of Buton asphalt in all road maintenance work.
Calvin Lai, Vice Chairman of Gada pointed out that in addition to Indonesian domestic demand, the rapid development of Asian economies and infrastructure projects in Belt and Road countries also increases the demand for asphalt as a raw material. For this reason, Gada is very confident about the market prospects of natural asphalt, and is already working with local asphalt producers to meet the demand. Mr Lai added that the partnership projects were initiated by the local government, which helped connect Gada with asphalt producers in northern Buton to help them overcome challenges in financing, technology acquisition and sales. Gada plays the role of an international connector to introduce large-scale equipment and advanced mining technology from Chinese mainland’s suppliers to Indonesia, as asphalt processing facilities are lacking in Indonesia.
Mr Lai noted that companies based in Hong Kong can tap into the city’s advantages, including international experience, financing capacity and expertise in product sales. With this base, Hong Kong companies are able to offer professional advice to Indonesian enterprises and help them expand their business overseas.
Gada is in negotiation with Indonesian enterprises, investors and suppliers for the construction of processing plants on Buton Island to enhance its asphalt processing capacity. In addition, Gada plans to launch a wood pellet production line to process the wood obtained during asphalt mining, which can be processed into environmentally-friendly fuel for electricity generation or industrial use.
Gada is prepared to work in concert with the Belt and Road Initiative to further Hong Kong’s role as a connector, and is eager to help Indonesia connect with more countries and corporate buyers to export its processed products to other Asian markets.