Business

Friday August 22, 2008

IJM Plantations plans RM600mil capex for Indon ops


Subang Jaya: IJM Plantations Bhd plans to invest RM600mil in capital expenditure to expand its Indonesian operations.

Chief executive officer and managing director Velayuthan Tan said the investment would be staggered over six to seven years.

“So far, we have spent RM50mil, mainly for land acquisition. We have signed three agreements with Indonesian parties to cultivate oil palm at three locations in East Kalimantan totalling about 33,000ha,” he said after the company AGM and EGM yesterday.

IJM Plantations, one of the latest Malaysian companies to venture into Indonesia, established nurseries there in March while field planting is targeted to start early next year.

Puru Kumaran (left) and Velayuthan Tan at the briefing.

With its latest acquisition, the plantation company has a total landbank of about 62,000ha.

IJM Plantations owns about 30,000ha in Sabah, which is mostly used up. According to its 2008 annual report, 62% are prime trees, 28% young trees and the balance immature oil palm.

On its earlier plan to launch a 30,000-tonne biodiesel module this year, Tan said the project had been deferred.

“We are very cautious about this venture. We want to wait for the right price and moment to embark on biodiesel,” he said.

“I wish I had a crystal ball,” Tan quipped when asked on the price trend of crude palm oil (CPO).

He said during the peak season in October and November when supply was high, CPO prices would typically be low while during the monsoon, prices would be high.

Although that had been the trend in past years, many industry players and analysts had been proven wrong when CPO prices rallied over the past few months.

Meanwhile, Tan was upbeat on the company’s prospects for the current financial year ending March 31, 2009 due to high CPO prices.

General manager (corporate affairs and finance) Puru Kumaran said IJM Plantations had had a good financial year ended March 31, 2008 when CPO prices averaged about RM2,000 per tonne.

He expects the company to continue doing well as CPO prices were still higher than 12 months ago.

 
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