Business

Wednesday June 27, 2012

Sarawak Oil Palms commissions refinery and fractionation plant

By JACK WONG
jackwong@thestar.com.my


KUCHING: Sarawak Oil Palms Bhd (SOP), which has ventured downstream in palm oil processing, has just commissioned its first refinery and fractionation plant as well as kernel crushing plant in Bintulu.

Group executive chairman Tan Sri Ling Chiong Ho said the company had invested RM200mil in the refinery and fractionation plant, with installed capacity of 1,500 tonnes per day, and kernel crushing plant.

The kernel crushing plant will be upgraded to raise its capacity to 500 tonnes per day by October this year.

“India and China are the markets for the products from the refinery and the new plants,” Ling told StarBiz yesterday.

He said the group's fifth palm oil mill with a capacity of 60 tonnes per hour in Kemena, Bintulu would be operational by July.

The group is now constructing its sixth palm oil mill in Baram, Miri.

“The RM60mil new mill, with installed capacity of 90 tonnes per hour, is expected to be operational by the second half of 2013,” he added.

SOP group has increased its oil palm plantations to some 63,000ha, out of a total landbank of more than 72,600ha. Last year, the group planted an additional 3,919ha.

As at Dec 31,2011, nearly 19,500ha or 31% of SOP plantations have yet to attain maturity. About 23,200ha or 37% of the palms are aged between four and 10 years while 15,100ha or 24.2% are between 11 and 20 years while less than 5,000ha or 8% are at least 21 years old.

Ling said with increasing planted areas maturing and more palms entering their prime production age, the group was expected to raise further its fresh fruit bunches (FFBs) production over the next few years.

Group FFBs production expanded by 24.7% to nearly 840,000 tonnes last year from 673,000 tonnes in 2010. FFB yield per ha increased marginally by 2.52% to 20.37 tonne as a result of dilution effect from the newly matured plantation area. Oil extraction rate, however, dropped to 20.9% from 21.23% during the same period. The group reported oil per ha of 4.26 tonnes.

Ling said SOP management was working to improve the oil extraction rate. Going forward, Ling said the group would be facing a substantial increase in operating cost, particularly in the hike of salary and wages as well as general increase in cost of operations.

He said the group had started upgrading its housing and amenities at estates and mills to provide better working and living environment and build a more stable workforce.

“The challenge for the group is to further improve its efficiency and productivity in order to maintain the profit margin.

Ling said SOP's net profit soared by 62% to RM266.2mil last year from RM164.3mil in 2010. Group revenue ballooned to RM1.17bil from RM728.2mil or an increase of 60%. Earnings per share improved to 55.9sen from 35.3sen.

He attributed the sterling performance to strong crude palm oil price and higher FFBs production.

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