KUALA LUMPUR: Wah Seong Corp Bhd, an oil and gas services company, is diversifying its business to plant oil palms in West Africa.
In its filing to Bursa Malaysia yesterday, Wah Seong said its unit WS Agrco Industries Pte Ltd was buying a 51 per cent stake in oil palm company Atama Resources Incorporated for US$25 million (RM75 million) from Silvermark Resources Inc and Giant Dragon Group Bhd Ltd.
Directors of Atama are York Shin Lim Voon Kee, Tommy Lo Seen Chong and Chua Seng Yong. Atama has a 30-year concession over 470,000ha in Congo to cultivate crops including oil palms.
Feasibility studies showed 38 per cent or 180,000ha of the concession area is suitable for oil palm cultivation, Wah Seong said.
The concession requires Atama to pay Francs CFA2500 per hectare of planted area in royalties to the Congo government, once it harvests the oil palm fruit bunches. It is expected to develop the oil palm plantation over 15 years, with planting to start in the second quarter of 2013.
Wah Seong sees its expansion into Congo's oil palm plantation as a source of sustainable and recurring income. "It is also an upstream integration because we're already in the business of supplying boilers, steam turbine and oil room centrifuges to palm oil millers both locally and overseas including Africa," it said. The Congo government has waived import duty on these equipment and machineries for five years.
Founded in 1994, Wah Seong's profits are mainly contributed from its pipe manufacturing and coating for the oil and gas sector.