Wednesday, 12 March 2008

Charoen to invest US$280mil in palm oil plantations

The Star online, Malaysia
Wednesday March 12, 2008

Charoen to invest US$280mil in palm oil plantations

JAKARTA: A unit of agro and aquaculture firm Charoen Pokphand Indonesia Tbk plans to invest US$280mil to develop palm oil plantations in West Kalimantan driven by demand for biofuel, a company official said yesterday.

Junaidi Sungkono, president director of PT Charindo Palma Plantation, said the funds would be spent on plantations and six palm oil fruit crushing mills in West Kalimantan. The project is due to be completed in 2015.

“Palm oil prospects are very good. Our domestic demand for crude palm oil-based biofuel has risen, so we would like to supply the needs,” Sungkono told Reuters, without elaborating on how much it intended to expand its plantations.

The company launched its palm oil business in 2006 by buying 67,500ha and began planting last year. From this initial investment, it expects to produce 239,200 tonnes of crude palm oil in 2016.

Crude palm oil prices have jumped more than 45% since the start of the year with Malaysia's benchmark May contract hitting an historic high of RM4,486 (US$1,402) a tonne on March 4 compared with RM3,082 on Jan 2.

Sungkono said the company planned to finance the project using US$20mil of its own funds and the balance through bank loans.

He also said the firm was looking at increasing its returns by developing palm oil byproducts.
“We are thinking of making oleochemical products in the future,” he said, adding that the plan would depend on government programmes and local infrastructure.

Indonesia is the world's top crude palm oil producer after surpassing Malaysia and expects its output of the commodity to reach 20 million tonnes in 2010. – Reuters