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Eagle to build two new CPO mills to double production
Publicly listed palm oil producer PT Eagle High Plantation will build two new palm oil mills in West Kalimantan and Papua as part of plans to double its crude palm oil (CPO) production within five years
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Publicly listed palm oil producer PT Eagle High Plantation will build two new palm oil mills in West Kalimantan and Papua as part of plans to double its crude palm oil (CPO) production within five years.
The company will spend around Rp 200 billion (US$15 million), or a quarter of the Rp 800 billion capital expenditure (capex) it has allocated this year, for both mills, which will start operation next year.
'We want to double our annual CPO production capacity from the current 400,000 tons in five years,' president commissioner Darjoto Setyawan said on Thursday.
The new mills will be able to process 45 tons of fresh fruit bunches into CPO per hour in each facility, adding to the existing seven mills it has already operated with a total capacity to process 385 tons per hour.
Eagle High, known as BW Plantation before industrial conglomerate Rajawali Corpora acquired it last year and merged it with plantation unit Green Eagle Holding Pte. Ltd., will spend another Rp 100 billion of its capex on new plantations in 10,000-hectare areas, while the remaining Rp 500 billion will be for plant maintenance.
The company, which plants and harvests fresh fruit bunches and then processes them into CPO and palm kernels, currently holds 425,000 hectares of landbanks in Kalimantan, Sumatra and Papua, 151,000 hectares of which have been planted.
Mature plantations cover 97,000 hectares of the total planted areas.
Other than building new mills, the company also signed on Wednesday an agreement with power provider, the Sumberdaya Sewatama Group, to build a palm oil-based biogas facility in South Kalimantan that will process liquid waste into a fuel for power generation.
'Funding for the investment came entirely from Sumberdaya, but we conduct profit-sharing. It is a win-win solution, in which we have a facility to throw our liquid waste, while they can get free waste for their production,' said Darjoto, who is also Rajawali Corpora managing director of mining and resources.
Eagle High will transfer the electricity yielded by the new facility to PLN, showing support for the government's rural electrification program, he added.
Since June 12, Eagle High officially belongs to the world's largest CPO producer, Malaysian-based Felda Global Ventures Holdings Bhd, which holds a 37 percent stake, and industrial conglomerate Rajawali Corpora, which holds 31.5 percent. The rest is owned by the public.
The acquisition will allow Rajawali pocket up to $632 million in cash as well as 2.6 percent of Felda shares, on which Darjoto is expected to begin paying a down payment of 25 percent of the transaction value by mid-July.
During the first quarter, the company booked Rp 734 billion in net sales, up 43 percent from last year in the same period, but its profits slumped to Rp 7.6 billion from Rp 120 billion because of higher operating expenses.
The company has yet to set revenue or production targets for this year as it will still face broad volatility in CPO prices, the president commissioner said.
Last year, the company booked Rp 2.26 trillion in revenues, a 30.85 percent surge from 2013, thanks to a 6 percent increase in CPO sales to 208,711 tons and 11 percent in palm kernels to 26,660 tons.
CPO production reached 329,417 tons last year, a 7 percent increase from 2013, while palm kernel production rose 13 percent to 53,349 tons. (foy)
