Granite supply hit after blasts rock quarry in Indonesia

March 26, 2007

Granite supply hit after blasts rock quarry in Indonesia

Cause of explosions at S'pore-owned firm on Karimun not known; sabotage not ruled out

By Azhar Ghani, Indonesia Bureau Chief


JAKARTA - FOUR explosions rocked a Singaporean-owned granite quarry in Indonesia late last week, temporarily halting production at the site which provides about half of the Republic's granite needs.

The blasts, which threaten to further damage Singapore's resurgent construction industry, happened at about 2am on Friday and hit PT Karimun Granite's site on Karimun in the Riau Islands, about an hour's ferry ride from Singapore.

The cause of the explosions has not been established, but sabotage has not been ruled out.

On Saturday, the Riau Pos newspaper carried a report headlined 'Four bombs explode in Karimun', and suggested the explosions were related to a recent controversy over granite exports.

Meanwhile, eyewitness Atan, a fisherman, told Antara news agency that the blasts caused huge fireballs.

Kompas daily quoted a resident of nearby Lembah Murni village, Mr Hery Safardi, as saying: 'When the blasts went off, the whole house shook.'

Indonesian media reports said the blasts damaged areas on the quarry's two loading piers, knocking out the conveyor system used to transfer granite chips onto barges. Electricity supply was also disrupted, but there were no casualties.

PT Karimun Granite, South-east Asia's largest hard rock quarry operation, exported up to 5 million tonnes of granite annually from 2001 to 2005, and hit a high of 5.1 million tonnes last year.

It is owned and run by the building materials arm of Singapore company Hong Leong Asia, which acquired a majority stake in it in 2000.

It has been in operation since 1972 and has a mining concession from Jakarta that lasts until 2013.

With Hong Leong Asia being one of Singapore's largest building materials suppliers, the indefinite suspension of operations at its Karimun quarry could worsen the Republic's current construction materials crunch.

Mr Arif Rahman, general manager of PT Karimun Granite, told The Jakarta Post that even before the blasts, his company had not sent any granite to Singapore for a month after the Indonesian navy stopped a 3,000 tonne shipment on suspicion the barge was being used to smuggle sand.

Indonesia banned the export of sand last month, citing environmental concerns and the need to protect its maritime boundaries.

Singapore projects supplied by PT Karimun Granite include those of the Singapore Mass Rapid Transit, the Housing Board and Jurong Island.

The latest disruption in supply also comes at a time when Hong Leong Asia is trying to ramp up its granite production to meet rising demand following the recent upturn in Singapore's construction sector.

In the group's annual results for last year, released on Feb28 this year, it said it had recently invested in additional equipment to boost production at its Karimun quarry.

But because Hong Leong Asia had already anticipated being affected by ongoing problems between Singapore and Indonesia, it could be prepared for the disruption caused by the blasts.

Meanwhile, Riau police chief Sutarman told The Straits Times yesterday that investigations into the blasts are ongoing, and that nothing has been ruled out.

So far, police have questioned the security guard who was on duty during the blasts and fishermen who were nearby when they happened.

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March 26, 2007, 9.36 pm (Singapore time)

Granite blasts may have been deliberate: Indon police


INDONESIAN police said they have found indications that the four blasts which hit a Singapore-owned granite quarry in the Riau Islands last Friday could have been deliberately set off.

Antara news agency reported on Monday that the suspicions of sabotage were raised after the police's forensics team found traces of low-level explosives at the Karimun scene - not the high explosives used onsite for mining operations.

Riau Islands' criminal investigation head Puja Laksona was quoted by Antara as saying: 'The people who did this were very professional as the four explosions went off perfectly.'

He did not indicate a motive for the possible sabotage on PT Karimun Granite, which is majority-owned and run by the building materials arm of Singapore's Hong Leong Asia.

The Riau Pos newspaper had suggested on Saturday that the blasts, which caused some damage to the site's equipment but no casualties, were related to an ongoing controversy over granite exports.

Last month, Indonesian navy stopped a number of Singapore-bound granite shipments, including one from PT Karimun Granite, on suspicion that the vessels were being used to smuggle sand.

Indonesia banned the export of sand last month, citing environmental concerns and the need to protect its maritime boundaries.

Despite recent assurances from Indonesia that there is no export ban on granite, Singapore's granite suppy has still not normalised, as the seized vessels remain detained and granite exporters have halted shipments for fear of running into problems caused by the navy.


MFA statement
On Monday, Singapore's Ministry of Foreign Affairs (MFA) issued a statement on the detained vessels, noting that they are still not freed.

It also said that when Singapore's Foreign Minister George Yeo met Indonesian Foreign Minister Hassan Wirajuda in Nuremburg on March 15, the latter had told him that an inter-departmental team had visited the Riau Islands to investigate why the vessels were detained.

'Minister Hassan assured Minister Yeo that the Indonesian team's verification process would be transparent,' the MFA statement said.

'As the vessels are still under Indonesian detention and we have not heard from the Indonesians since then, MFA has sent a Third Party Note (diplomatic note) to the Indonesian Embassy in Singapore on March 26 to seek an update on the results of the Indonesian team's investigation.'


Hong Leong Asia says output not affected
Meanwhile, Hong Leong Asia yesterday issued a statement saying that production at PT Karimun Granite has not been affected by the blasts and the damaged loading system can be repaired within a short time frame.

But that is scarcely good news for the local construction sector, as the quarry's shipments to Singapore has already been disrupted due to the detention of the vessels.

'Prices of granite, sand and ready-mix concrete are expected to increase further,' the building materials company said in a statement to the Singapore Exchange.

It has stockpiles of granite and sand in the short term and has alternative supplies from other countries, Hong Leong Asia added.

Industry players say prices of concrete have almost tripled to S$200 per cubic metre, from S$70 before the Indonesian ban on sand exports. Sand is an ingredient in concrete, together with cement and granite.

Prices of other building materials which need sand and granite have also increased in price, contractors said.