Lonsum to build new palm oil mills

The Jakarta Post, Jakarta

In a bid to boost its production, the publicly listed plantation company PT PP London Sumatra Indonesia (Lonsum) plans to build three new palm oil mills in Sumatra -- all expected to start operation later this year.

"We are going to invest a total of Rp 20 billion (US$2.2 million) for two new mills in South Sumatra and one more in North Sumatra," said Lonsum corporate secretary Beny Haryanto on Friday.

The new three mills are expected to yield 60 metric tons of crude palm oil (CPO) an hour, Beny added.

Supported by 48 plantation estates, the company currently operates 10 palm oil mills, including three built in 2003 and 2004, with a total processing capacity of 1,416,000 tons of fresh fruit bunch (FFB).

Benny did not mention by how many tons of FFB the planned mills would help increase the company's total capacity.

"Actually, our (existing) mills can process up to 1,500,000 tons of FFB but now they are only running at 70 percent of their capacity due to the amount of raw material," said Lonsum's investor relations Agustino Sudjono.

Lonsum's total CPO production in 2004 increased to 345,000 metric tons of CPO from 329,311 metric tons in 2003.

This year, the company is expected to produce 450,000 metric tons of CPO.

The CPO, along with rubber, accounted more than 80 percent of Lonsum's sales revenue of Rp 1.65 billion in 2004 -- a 30 percent increase from 2003.

Lonsum, established in 1906, is currently the nation's second biggest publicly traded agricultural company by market value. Aside from having its own oil palm plantations and processing plants, it also supplies palm kernels to other CPO producers in Indonesia.

In 2005, the company strives to increase its CPO production despite the declining CPO market price.

"We are focusing on increasing production and are not planning to open new plantations this year," said Agustino. (003)