Gula Perak Bhd associate Pandawa Sakti Sdn Bhd has awarded a US$260mil contract to Changsha Engineering Corp Ltd of China to design, build and operate a wood pulp mill in Sabah.

The local partner would finance the joint-venture project, while Changsha would share its experience and transfer wood pulp technology, Pandawa Sakti managing director Lim Sue Beng told reporters after the signing of the contract in Kuala Lumpur yesterday.

Changsha chairman and general manager Fan Yan signed on behalf of the company.

“Under the terms of the agreement, Changsha will provide engineering design, civil construction, equipment and machinery including installation, technical services, commissioning and mill operations as well as training all our staff,” Lim said.

The construction of the wood pulp mill, to be sited on 63ha in Mempakad, is expected to start by mid-2006.

The mill will be completed and operational by mid-2009. It is expected to employ 800 people, including 50 engineers, from China.

An acacia tree plantation on 25,000ha near the mill will provide the raw materials.

Lim said the wood pulp would be exported exclusively to China and made into various products by Changsha

The mill's initial output of 300 tonnes a day is projected to double after three years. For the first year of operations, Lim has projected a turnover of US$55mil.

He also said Pandawa Sakti, set up early this year, was in discussion with Export-Import Bank of China and expected to receive funding within six months.

He also expressed hopes of setting up a paper mill, costing about US$500mil, in Peninsular Malaysia in three years.

Changsha is a leading pulp and paper mill contractor in China. It has built and commissioned wood pulp mills in Egypt, Pakistan and Myanmar.