P

lantation firm PT Astra Agro Lestari (AALI), part of Astra International (ASII), has announced that it would allocate between US$300 million and $350 million to finance capital expansion, which will include the construction of two new processing mills and a palm oil refinery this year.

According to Astra Agro president director Widya Wiryawan, the new mills will be located in Aceh and East Kalimantan provinces. Each mill will cost around $15 million and will have a capacity of 45 tons per hour. 'The construction will begin this year and is expected to be complete within 18 months,' he said in Jakarta on Tuesday.

Currently, Astra Agro operates 26 mills with a total capacity of 1,230 tons per hour. It will begin operations at two other mills ' also with a capacity of 45 tons per hour each ' in South Kalimantan and Central Sulawesi provinces by year-end.

By 2015, the company will have a total of 30 mills.

Besides processing mills, Astra Agro will also begin operations at its first refinery in 2013. The $75-million refinery is located in Mamuju, West Sulawesi, and will convert the company's crude palm oil (CPO) into olein and stearin. The refinery's production capacity is expected to be 2,000 tons per day and will be supplied from Astra Agro's plantations in Kalimantan and Sulawesi.

Funding for the expansion will be generated from internal reserves and bank loans, according to Widya. He said that four banks ' the Overseas-Chinese Banking Corporation (OCBC), Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation and Bank of Tokyo-Mitsubishi UFJ ' had expressed their commitment to providing $200 million in loans for the company.

'Right now we are in discussions to increase the loan amount to $400 million. Hopefully we will seal the deal in this second quarter,' he said.

Meanwhile, Astra Agro reported that its CPO sales volume for the first quarter of 2013 rose by 28 percent to 382,900 tons from the same period last year. Sales were still dominated by the local market with 96.3 percent, exports accounting for the remaining 3.7 percent.

However, despite the double-digit growth in sales, Astra Agro only managed to increase its revenues by 5.5 percent to Rp 2.72 trillion (US$ 280 million) as a result of low CPO prices. Between January and March, its average selling price was Rp 6,466 per kilogram, lower than the Rp 7,733 per kilogram it recorded last year.