State-owned industrial conglomerate Rajawali Nusantara Indonesia plans to spend Rp 1 trillion ($106 million) to expand two of its palm oil units in North Sumatra.
RNI president director Ismed Hasan Putro said on Thursday that the two subsidiaries — Perkebunan Mitra Organ and Laras Kartika — had secured a loan agreement to finance the expansion from state-owned Bank Rakyat Indonesia, the country’s second-largest lender by assets.
“The money will be used to increase our land bank by 20,000 hectares and to build a refinery facility,” Ismed said. RNI, he added, plans to have 150,000 hectares in its land bank by 2014.
RNI intends to capitalize on Indonesia’s vast sources of palm oil, the valuable commodity that can be refined into products ranging from soap to biofuel.
Ismed said RNI’s palm oil business was not as big as its other interests, but the firm intended to expand trough acquisition. “We will seek funding from state-owned lenders,” he added.
RNI has 46,000 hectares of palm oil plantation land banked, while crude palm oil production was 89,698 metric tons in 2011.
Indonesia produced 20 millions tons of CPO in 2011, 70 percent of which was exported, mainly to China, India and Western Europe. The Indonesian government aims to boost this year’s CPO production to 25 millions tons and to increase its export volume to as much as 18 millions tons.
RNI has interests in industrial agriculture, pharmaceutical products and commodity trading. It controls 10 sugar factories in Java, as well as tea plantations. In total, it controls 15 subsidiaries and another three affiliated companies.
The government has said it plans to combine all of its plantation companies, including RNI, into a single entity that will help to streamline operations.