IJM Plantations refinery plan picking up pace

PETALING JAYA: IJM Plantations Bhd's (IJMP) partnership with Kuala Lumpur Kepong Bhd (KLK) to put up a refinery complex in Indonesia is picking up pace. 

"We're currently seeking approval from the Indonesian authorities to build a jetty. 

After it is approved, only then can we start work on the refinery," said IJMP chief executive officer and managing director Joseph Tek Choon Yee. 

In a briefing after the company's shareholders' meeting here yesterday, Tek said the super-sized refinery complex which include a kernel crushing plant in Sangatta would be the first in East Kalimantan. 

It will service some 10 palm oil mills within a 90km radious. 

He said KLK holds the controlling stake of 63 per cent in the planned 1,000-tonne a day refinery. IJM owns another 32 per cent and the remaining 5 per cent is taken up by an Indonesian entrepreneur, as required by Indonesian investment policy. 

Construction work on the refinery is estimated to start next year. Hopefully by 2018, IJMP would be able to move up the value chain and export products such as cooking oil from this planned refinery. 

When asked on IJMP's capital expenditure for the year, chief financial officer Purushothaman Kumaran replied, "we're spending around RM150 million as our second palm oil mill is nearing completion. Next year, we will start on the third in East Kalimantan. 

IJMP is a medium-sized oil palm planter with 58,900ha across Sabah and Indonesia. This year, it plans on planting up another 1,000ha. 

“Our target is to plant up about 40,000ha in Indonesia. If good opportunities come by, we're open to synergistic landbank expansion," Purushothaman said. 

In ensuring high yields and overall optimisation, he said, every year, his team replant around 800ha of old trees with higher yielding seedlings. 

The average age of its palms in Malaysia is about 14 years, while most of the planted areas in Indonesia are young palms just coming into maturity. “We are among the top planters in the industry in terms of crop and oil yield."