Wednesday, March 12, 2008

Thailand's Charoen Pokphand eyes profits from crude palm oil


THAILAND/INDONESIA: Thailand's largest agro-industrial conglomerate Charoen Pokphand Group (CP) plans to grow oil palms in Indonesia and Thailand in order to profit from the record crude palm oil prices fueled by an increase use of the vegetable oil to produce biodiesel.

CP intends to invest THB600 million (US$19 million) over the next three years to plant oil palms on 6.72 square kilometres (2.6 sq miles) of its own land in Nakhon Si Thammarat, Songkhla, Ranong, Saraburi and Kamphaeng Phet, according to a Bangkok Post report. The company also aims to expand the plantation area through contract farming to 40 square kilometres (15 sq miles) a year in the first three years, and increase it to 80 square kilometres (31 sq miles) a year from the fourth year onwards.

''We have set a target to have the oil palm plantation area under the contract farming to 320 square kilometres (126 sq miles) within 10 years,'' said Montri Congtrakultien, the company's president and CEO.

As part of the investment plan, the company would set up biodiesel business units in three strategic locations, requiring an investment of about THB 200 million (US$6.3 million) each.

The first unit is planned in Nakhon Si Thammarat to process the output of the lower south region, with the second one in Chumphon to handle the output in the upper south region. The third unit will be built in Saraburi to process the output from the central region.

Each unit would consist of a dumping yard, a crushing plant, a biodiesel refiner and either a 1-megawatt power plant or a gasifier. A gasifier is expected to require an investment of about THB 50 million (US$1.6 million), while a biodiesel plant needs about THB 80 million (US$2.5 million), he said. According to the company's executives, the biodiesel plants are expected to begin production over the next four years, with the output slated to be sold to oil companies.

Meanwhile, CP's Indonesian arm also indicated plans to invest US$280 million to develop palm oil plantations in West Kalimantan, Indonesia. Junaidi Sungkono, president director of PT Charindo Palma Plantation, said during an interview with Reuters, 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.

Charindo acquired 67,500 hectares (166,796 acres) of land for the oil palm project in 2006. The Indonesian company expects to yield 239,200 tonnes of crude palm oil from the acquired land area in 2016.

Junaidi 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.

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