Ambition Runs in Corporate Clan’s Blood: Anderson

Anderson Tanoto. (GA Photo/Suhadi)

By : Muhamad Al Azhari | on 11:29 PM October 05, 2014
Category : Business, Corporate News

Anderson Tanoto. (GA Photo/Suhadi) Anderson Tanoto. (GA Photo/Suhadi)

Jakarta. Royal Golden Eagle, an Indonesian conglomerate focused on resource-based manufacturing industries, is looking to expand into making specialty cellulose and exporting liquefied natural gas from Canada, Anderson Tanoto, son of the firm’s founder Sukanto Tanoto, said in a recent interview.

RGE operates a wide range of business including pulp and paper, palm oil, petroleum and gas spanning across Indonesia, China, Singapore, Brazil and Canada.

Sukanto, 64, is ranked 11th on this year’s Globe Asia list of wealthy individuals, with a net worth of $2.2 billion.

“We have produced products that give value added; we have processed woods into pulp and paper, but we can do more,” Anderson, scion of the founder of the giant conglomerate that holds more than $15 billion in assets, said.

In Indonesia, Sukanto opened his first business in Kerinci, Riau, in 1993. Riau Andalan Pulp and Paper entered the market for commercial pulp production in 1995 and commercial paper production in 1998.

In the 20 years since, Sukanto has expanded his company into a powerhouse conglomerate.

Its pulp and paper business is consolidated under Asia Pacific Resources International Limited (April), a Singapore-based management company.

April controls a 1,750-hectare manufacturing complex in Kerinci, one of the biggest single-site pulp mills in the world, able to produce about 2.8 million tons of pulp and 820,000 tons of paper per year.

Its PaperOne line of office paper product now sells in more than 75 countries.

The things pulp can make

Anderson said there are many other uses of wood fibers.

“For example, it can be processed into rayon for clothing fabrics. It can also be processed into specialty cellulose, which has many uses, including in the making of LCD screen. They use what it is called coating cellulose.”

In the manufacturing of liquid crystal displays, a cellulose substrate is applied between layers of glass to produce a polarized, flexible film that protects the screen and increases its surface energy.

“Cellulose can also be used [as additive] into toothpaste, and many other. But such nowadays, such processing is done mostly in Europe and the United States. If we can do such processing in Indonesia, it may be our future,” Anderson said.

Outside Indonesia, RGE controls Sateri Holdings, one of the largest specialty cellulose producers in the world.

The Hong Kong-listed company produces various grades of high-purity dissolving wood pulp and viscose staple fiber — raw materials for every day items ranging from textiles, baby wipes, soft ice-creams to pharmaceuticals and industrial products like tires.

Sateri, which has upstream operations in Brazil — a 150,000-hectare eucalyptus plantation and a mill that produces high-purity dissolving wood pulp — has yet produce specialty cellulose for LCDs.

Sateri’s downstream business base is in China, where it operates facilities that processes products from Brazilian operations into viscose staple fiber. It also markets the products in China.

LNG contender

Anderson, the company’s rising leader, said RGE aims to start shipping liquefied natural gas from a facility in Canada to serve customers in Japan and China in 2017.

RGE controls Pacific Oil & Gas (PO&G), an independent energy resources development company that builds, owns and operates projects throughout the energy supply chain, including an liquefied natural gas (LNG) export facility in Canada.

“No company has ever shipped LNG from Canada overseas. Through Pacific Oil & Gas, we aim to become the first company that exports LNG from Canada,” he said.

As of September this year, 17 proposed LNG export facilities in Canada have entered the regulatory review process.

As these proposals slowly wind their way through Canadian regulators’ review processes, recent energy market developments have somewhat dampened the profitability of Asian export ventures. Conflict in Ukraine prompted Russia to ink a $400 billion deal with China, which is expected to partly tamp down that country’s demand side prices for some time to come.

Trusted position

After four years at Universiy of Pennsylvania’s Wharton School, Anderson spent two years at Bain & Company before joining the family business in March 2013.

The 24 year-old April manager says he spends most of his time in Kerinci, where he is involved in fiber operations and charged with transforming the business through a lean manufacturing program.

He made his first media appearance last year during Ramadan, with a message aimed to environmental activists in which he sought to turn over a new leaf after criticism of RGE’s pulp and paper business.

Although his family name bears some weight among staff, Anderson said he did not get an instant position at the top of company ladder. He said he needs to prove himself worthy of leading his father’s business empire.

Anderson professes a passion for community development and philanthropy, which he exercises through strategic direction of the Riau Ecosystem Restoration project in Kampar, Sumatra.

Anderson is a member of the Board of Trustees of Tanoto Foundation, a foundation established by his father founded in 1981.

The foundation has been active in promoting scholarships for economically disadvantaged students living in the areas in which the company operates in Indonesia.

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