Friday July 31, 2009
IJM Plantations to finish buying spree by year-end
KUALA LUMPUR: IJM Plantations Bhd will finish its buying spree of oil palm estates in Indonesia by end-2009 and start planting immediately after to tap growing demand for the vegetable oil, a company official said.
Chief executive Velayuthan Tan told Reuters the company had so far met nearly 70% of its 40,000ha acquisition target on the Indonesian side of Borneo island, located near its existing 30,000ha of plantations in Sabah.
The firm set its sights on acquiring 40,000ha since last year when palm prices hit record highs although costly land prices and bureaucratic red tape in taking over land in Indonesia slowed the shopping spree.
But in April, IJM Plantations snapped up a 75% state in an unlisted Indonesian firm to buy about 10,000ha of titled estate land in prime oil palm growing province of Sumatra, as agricultural land in Malaysia runs out. The purchase was one of the first in the industry that had stopped acquisitions for at least a year, analysts said.
“The recent rights issue we announced to raise about RM330mil should also help in this case. We want to buy enough and not put too much pressure on our balance sheet,” Tan said. — Reuters
“If the El Nino impacts the region, then we can expect a sharp decline in production,” he said, referring to the weather condition bringing drought and drying up yields in top palm producers Indonesia and Malaysia, but he declined to give a forecast. — Reuters