T

he world’s second-largest oil palm plantation firm Golden Agri-Resources Ltd. (GAR), part of the Sinar Mas Group conglomerate, is earmarking US$550 million for capital expenditure (capex) this year as it plans to acquire more concession areas and increase the capacity of its refineries.

About $200 million of the capex figure would be allocated for its upstream business, while the rest would be channeled to its downstream business, the Singapore-listed firm announced in Jakarta on Wednesday.

GAR plans to acquire between 35,000 and 40,000 hectares of new concession areas, mostly located in Kalimantan. By year-end, it hopes to have up to 503,400 hectares of plantation areas, including plasma, 8.6 percent higher than 2012.

In its downstream division, the firm is expanding the capacity of its North Sumatra refineries and expects to produce 2.6 million tons of refined products in 2013, up 30 percent from the previous year.

GAR, which is 49.9 percent owned by the family of tycoon Eka Tjipta Widjaja through investment company Flambo International Limited, operates in Indonesia and China. In Indonesia, it owns and runs oil palm plantations, mills, refineries and also produces palm oil derivative products, such as cooking oil, margarine and shortening. In China, it owns and operates crushing and refinery facilities, and manufactures refined edible oil and food products.

The firm is aiming to book between 5 percent and 10 percent growth in palm-product output by the end of 2013. Based on its 2012 unaudited financial report, its crude palm oil (CPO) production volume rose slightly by 9 percent to 2.36 million tons, while that of palm kernel climbed 14 percent to 554,000 tons.

GAR’s total revenues increased 1.7 percent to $6.05 billion. Indonesia accounted for $4.76 billion or 78.7 percent of the revenues, followed by China with 21.3 percent.

CPO remained the biggest contributor to the revenue figure at 44 percent. Unbranded refined palm products, branded products, soybean meal and soybean oil made up 29 percent, 8 percent, 8 percent and 4 percent of revenues, respectively.

Meanwhile, PT Sinar Mas Agro Resources and Technology, a GAR subsidiary, is planning to build a new oleo-chemical plant this year in an effort to diversify its business. According to Sinar Mas Group managing director G. Sulistiyanto, the $245 million plant will be located in Dumai, Riau province.

He said that Sinar Mas Agro had submitted a proposal to the government as it was looking to acquire incentives in the form of a tax holiday. “We are still waiting for feedback,” he added.

On Wednesday, Sinar Mas Agro, along with GAR, launched a forest conservation pilot project, which focuses on preserving high carbon stock (HCS) forests. Sinar Mas Agro president director Daud Dharsono said that the project was expected to help Indonesia, as the world’s largest palm oil producer, cope with the growing demands for HCS forest conservation.