Two major groups announced plans last week to pump a total of $345 million into oil palm plantation expansion.
PT Charindo Palma Plantations (CPP), a unit of Thailand’s Charoen Pokphand group, plans to invest $280 million after starting the planting of seedlings in its new plantations, Asia Pulse reported Tuesday (11/3/08).
The additional investment will be needed to expand plantations under its three subsidiaries - PT Satria Multi Sukses, PT Charindo Palma Oetanma and PT Airlangga Sawit Jaya -- which have 67,500 hectares of oil palm plantations in West Kalimantan.
Junaidi Sungkono, president of CPP, said the first planting in the three plantations had already cost more than $100 million.
Additional investment of $100 million will be needed by Satria Multi Sukses, which has the largest plantation of 29,000 hectares. The other two will need $90 million each.
PT Sampoerna Agro said Friday it plans to spend Rp600 billion ($65.14 million) to acquire 15,000 hectares (37,070 acres) of plantation for palm oil this year, Reuters reported.
Finance director Eddy Kurniawan said the company planned to use its internal resources to fund the expansion although he did not rule out seeking loans from banks.
"The expansion is likely to be in Sumatra, Kalimantan and Sulawesi, although we have not decided the exact place," Kurniawan said.
The company produced 1.18 million tons of crude palm oil last year and aims to increase this slightly to 1.2 million tons.
He said the company's budget assumed a crude palm oil price of $950 a ton, far below the current market price of around $1,200 a ton.