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Jakarta Post

Astra Agro acquires Dumai refinery to boost business

  • Khoirul Amin

    The Jakarta Post

Jakarta   /   Thu, January 29, 2015   /  12:30 pm
Astra Agro acquires Dumai refinery to boost business

Palm oil producer PT Astra Agro Lestari (AALI), part of diversified conglomerate PT Astra International, announced Wednesday that it had officially acquired a half stake in PT Kreasijaya Adhikarya, giving it access to the latter'€™s refinery to boost its downstream products.

Astra Agro officially acquired 50 percent of Kreasijaya for Rp 75 billion (US$5.9 million); the remaining 50 percent is owned by KL-Kepong Plantation Holdings Sdn. Bhd. (KLKPH), according to the firm'€™s statement published on the stock exchange website.

KLKPH is a subsidiary of Malaysian plantation giant Kuala Lumpur Kepong Berhad, which has around 250,000 hectares of plantation land across Malaysia and Indonesia.

'€œBy acquiring Kreasijaya, we will also have a refinery in Dumai, Riau, owned by Kreasijaya,'€ Astra Agro spokesman Tofan Mahdi told The Jakarta Post.

Astra Agro'€™s head of investor relations, Rudy Limardjo, said previously that the refinery had a total capacity of 2,000 tons of processed products '€” such as olein and stearin '€” per day, equal to the total capacity of his firm'€™s refinery in West Sulawesi.

The publicly listed company built a $75 million refinery in Mamuju, West Sulawesi, in 2013. The refinery processes the company'€™s crude palm oil (CPO) into olein and stearin.

'€œWe'€™ve long been operating an upstream business, so we started expanding our downstream business,'€ Tofan said, adding that it was in line with the government'€™s quest for a boost in value-added products.

Astra Agro ended last year by successfully selling 255.073 tons of olein '€” the first olein sale in its history, according to the firm'€™s unaudited report. It saw a 13.3 percent increase in its CPO production to 1.7 million tons last year from 1.54 million tons in 2013, according the report.

Tofan said that while his firm was a relative newcomer in the olein business, he was upbeat that the future remained bright as the food market kept growing.

Olein is a liquid obtained by the fractionation of palm oil, mainly used as frying and cooking oil.

Tofan said that other than boosting CPO production and expanding its refineries'€™ capacities, his firm had also enhanced marketing for its downstream products.

'€œWe have established a joint venture partnership with KLKPH. The joint venture is based in Singapore to market our olein and stearin,'€ he said.

Based on information released by Kuala Lumpur Kepong, its wholly owned subsidiary KLKPH entered into a joint venture with Astra Agro on Aug. 30, 2013, with paid-up capital of S$2 million (US$1.5 million).

The joint venture, known as Astra-KLK Pte. Ltd., is 51 percent owned by KLKPH and 49 percent owned by Astra Agro.

Under the partnership, Astra Agro had exported its downstream products to China and the Philippines and was now looking for other export destinations, Tofan said.

Astra Agro'€™s shares, which are traded on the bourse under the code AALI, fell 2.47 percent to Rp 23,675 per piece on Wednesday'€™s close from Rp 24,275 a piece at the previous closing.

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