Indofood snaps up 60% palm oil stake for Rp125bn

19 October 2006 09:53  [Source: ICIS news]

SINGAPORE (ICIS news)--Indofood has given its biodiesel ambitions a shot in the arm by acquiring 60% ownership in 85,541 hectares of palm oil plantations at a price of Rp125bn ($13.7m/€10.9m).

The Indonesian food processing firm said on Thursday that the plantations, owned by PT Mentari Subur Abadi, PT Swadaya Bhakti Negaramas and PT Mega Citra Perdana, are spread across Indonesia, at south Sumatra, east and central Kalimantan respectively.

The transaction will be funded with internal cash and when completed, will bring the company’s total plantation area ownership to 225,000 hectares, it said.

“Indofood’s long term objectives are to fulfill all the crude palm oil (CPO) requirements of [our] refinery division and to become one of the players in the biodiesel industry,” company director Thomas Tjhie said in a statement.

The company’s subsidiary Edible Oil and Fats Group (EOF) currently owns 138,000 hectares of plantation land bank, of which 63,000 hectares are planted with palm oil trees.

The output from this plantation is only able to fulfill 50% of CPO requirement of its refinery division, which produces cooking oil, margarine and shortenings.

Indofood has planned to increase its oil palm tree plantation area to approximately 250,000 hectares by 2015, which would then be able to produce more than 1m tonnes/year of CPO.

A company official confirmed that Indofood has received a proposal from Indonesia’s BPPT (Agency for the Assessment and Application of Technology), a government research programme, for a joint venture in the biodiesel production but has yet to finalise any plans.

The official also noted that the technology used at the biodiesel plant will be derived from BPPT.

By: Gina Myung
+65 6780 4359

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