The palm oil giant hopes to tap a market set to grow to $16bn by 2021 as it opens a second plant in partnership with Spain’s Cepsa.
A tie-up between Golden Agri-Resources and Cepsa has launched its first oleochemical plant in Indonesia, concluding a process through which they have invested about €300 million over two years.
The Singaporean palm oil company and the Madrid-based integrated energy group say the deal marks a milestone in their attempt to serve the Asian market, after the pair secured a foothold in Europe through their acquisition of a German factory.
Run by Sinar Mas Cepsa, a 50/50 joint venture between the two partners established in 2014, the Indonesian plant will make fatty alcohols from palm kernel oil, a crucial input in the manufacturing of household cleaning goods and personal care products. It is based in Dumai, on the island of Sumatra, and has an annual production capacity of 160,000 tons.
Sinar Mas Cepsa predicts the global market for natural fatty acids will hit $16.2 billion by 2021, up from $12.4 billion in 2016. Of this, it estimates, the lion’s share of the revenue generated will come from the Asia-Pacific region, which currently accounts for more than 65 percent of overall capacity.
“If we try to summarise in just one word this project within Cepsa, I would say the word is ‘new’. New feed stocks. It’s the first time that we will produce chemical products that are not derived from petrol, but are instead vegetable-based – new location, new business and new market,” said José María Solana, deputy chief executive of Sinar Mas Cepsa.
Golden Agri is the second-largest palm oil plantation in the world, with a planted area of more than 480,000 hectares. It is majority owned by British Virgin Islands-based Flambo International, with the balance – 49.65 percent – listed on the Singapore Stock Exchange since 1999. Silchester International Investors, a London-based asset manager, owns nearly 11 percent.
Golden Agri-Resources has been accused of burning forests to develop plantations in the past, while consistently denying unsustainable farming practices. Sinar Mas Cepsa said its kernel palm oil is sustainably sourced.