The Republic of Gabon will invest $56.8 million to increase its equity stake in Olam Palm Gabon (OPG) and Olam Rubber Gabon (ORG), the joint ventures it has with Olam International, the global agribusiness operating across the value chain.
The investment signifies the projects’ importance in creating local employment and developing Gabon’s nascent palm and rubber industries, significant to the economy.
The deal will take Gabon’s stake in both JVs to 40 percent from 30 percent in OPG and 20 percent in ORG previously. Olam will maintain the remaining 60 percent in both.
The investments will release around $30 million in cash for Olam of which $14.5 million will go directly into the company’s equity as capital reserves, according to the a statement on Olam’s website. They are in line with Olam’s strategic plan to unlock value by partnering with strategic players to co-share investments in capital intensive and long term projects, continued the statement.
The investment marks the achievement of key milestones, according to a release on Olam’s website. These include the planting of 12,710 hectares of palm plantations and 2,019 hectares of rubber, putting them on course to reach Phase 1 targets of 50,000 hectares and 28,000 hectares.
“Our joint venture with Olam in palm and rubber in Gabon is an integral part of the president’s ‘Emergent Gabon 2025 Vision’ to diversify our economy and develop Gabon’s vast agricultural potential,” Denise Mekam’ne, a spokesperson for Gabonese Ministry of Relations with Institutions, wrote in a statement.
OPG and ORG represent Olam’s flagship investments into both palm and rubber, according to Ranveer Singh Chauhan, global head of Olam’s palm and rubber business.
“We view Gabon as an ideal location for developing palm and rubber plantations, both from an agro-climatic standpoint as well as the commitment that we see from the Government to develop the country’s agricultural potential. We are proud to have reached the key milestones in both our joint venture operations, setting the benchmark for how large-scale plantation development can be responsibly implemented in Africa,” he wrote in a statement.
Olam began operations in Gabon in 1999 with the establishment of a timber trading business.