Golden Agri-Resources planning to double palm oil refining capacity in Indonesia to 2.6 million tonnes during next two years, executive says; company also planning to boost palm oil refining capacity in China to 396,000 tonnes during H1 2012

LOS ANGELES , February 28, 2012 () – Rafael B. Concepcion Jr., the executive director of Singapore’s Golden Agri-Resources Ltd., said that the company plans to double its Indonesian palm oil refining capabilities to 2.6 million tonnes during the next two years, Bloomberg reported Feb. 28, 2012.

Currently, Golden Agri has a palm oil refining capacity of 1.4 million tonnes in Indonesia and more than half a million hectares (1.2 million acres) of plantings, he added.

Concepcion Jr. said that the Indonesian government’s 2011 decision to reduce export taxes will benefit the company, and provides incentives to increase production of downstream and value-added products. It also provides an incentive to expand into international markets.

Concepcion Jr. predicted that Golden Agri’s 2012 results would reflect the full benefits of a lowered export tax.

The company’s net profit during the fourth quarter fell 36% year-over-year to US$748 million in the wake of increased fertilizer costs and a reduction in palm oil products output.

The reduction in export tax charges will most likely attract new entrants to the palm oil market in Indonesia, said Concepcion.

On Feb. 27, ICOP Corp, the second largest palm oil firm in Malaysia, said that within three years it would be able to build a refinery in Indonesia provided that output form its Indonesian estates increases.

Malaysia's second largest palm oil firm IOI Corp said on Monday it can build a refinery in Indonesia in three years once its secures higher supply from its estates in the country.

During the first half of 2012, Golden Agri is planning to increase its annual crude palm oil refining capacity in China—the world’s largest edible oil market—from 380,000 tonnes to 396,000 tonnes.

Officials at Golden Agri said that the company is planning to invest $500 million in growth during 2012. Half of that amount will be used to develop plantations, while approximately $200 million will be put towards developing its downstream industry.

The primary source of this article is Bloomberg, New York, New York, on Feb. 28, 2012.

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