POSCO INTERNATIONAL CORPORATION POSCO INTERNATIONAL
pushes ahead with the construction of a crude palm oil refining plant in Kalimantan, Indonesia
- Invested 200 million dollars to construct a refining plant to achieve the goal of starting operation by 2025 with an annual capacity of 500,000 tons
- Its palm plantation corporate achieved a sales turnover of 80 million dollars in 2022, which is a 437% increase from 2020
- Vice-chairman Jeong Tak declared, "We will make this year the first year of re-establishing the agro business to accelerate the transition to a company of Globally Integrated Corporation"
POSCO INTERNATIONAL will take a big step forward to evolve from a 'trading business' into a 'Globally Integrated Corporation' by making bold investments to core businesses such as energy, agro, sustainable parts, and more.
The board of directors at POSCO INTERNATIONAL has recently decided to enter the palm oil refinement business in Indonesia. The investment of 200 million dollars will be made through AGPA which has been established in Singapore for the expansion of the palm business.
The company plans to start the construction of the plant in the fourth quarter this year and start operating by the second quarter of 2025. The production capacity will amount to 0.5 million tons a year. Finished products will be exported to not only the local market in Indonesia but also to other countries including Korea and China.
The refining plant site is very highly likely to be Kalimantan island. Indonesia is the world's biggest producer of palm, and Kalimantan has geographically ideal conditions for delivering crude palm materials and exporting products.
In the palm oil refinement business, a refining plant is used to further process the crude palm oil produced from palm plantations once more. Refined palm oil is consumed in many areas of our daily lives, such as foods, cosmetics, and bioenergy.
Palm oil has the greatest production per unit area among all vegetable oils, which is nearly 10 times higher than soybean oil and 7 times higher than sunflower oil. According to USDA, the global annual demand for palm oil was 77 million tons in 2020 and will continue to increase every year up to 95 million tons by 2030.
Palm oil was around 600 dollars per ton in 2020, but the price soared to 1,800 dollars due to a global supply chain crisis in early 2022. The price is being maintained at around 950 dollars for now, but the global consulting group LMC expects the palm oil price to remain strong for the next 10 years.
The industry believes the high productivity and cost-efficiency of palm oil will enable POSCO INTERNATIONAL to increase its palm business competitiveness and dramatically improve profitability as the company enters the refinement business.
Since 2017, the company has been producing crude palm oil from palm plantations in Papua, Indonesia. In 2022, the company achieved 180,000 tons in CPO production, 170 million dollars in sales, and 80 million dollars in business profits. This is a 232% increase in sales and a 437% increase in business profits compared to 2020. The profits of 80 million dollars earned in palm business exceed 10% of the total business profits of about 900 billion won achieved in 2022, which was before POSCO INTERNATIONAL acquired POSCO ENERGY.
The local palm plantation corporate in Indonesia, PT. BIA has not only increased profitability up to this point ever since its establishment but also kept engaging in environmental policies and coexistence with local communities to more than meet the global demands of the international community. In 2020, the company became the first Korean country to declare NDPE policy, which is the environmental social policy for its palm business to protect the environment and respect the rights and human rights of the local communities when producing palm oil. In 2021, the company has acquired the international RSPO certification to prove the sustainability of its palm oil business.
* RSPO : Roundtable on Sustainable Palm Oil
* NDPE : No Deforestation, No Peat, No Exploitation
Starting in 2017, the company has not only provided free medical services to more than 7,000 local people by organizing a medical volunteer team of about 30 Korean medical staff members, but also established educational facilities such as the kindergarten, elementary school, and middle school within the plant to provide an educational opportunity to about 1,000 undereducated children for free. The company has also been continuing its efforts in recent years to support the conservation of the environment and biodiversity by planting mangrove trees near the operation site for reducing carbon emissions and sponsoring the study project on Indonesian gibbons.
"We will transition from a trading company to a Globally Integrated Corporation to achieve sustainable growth by pushing ahead with bold investments and developing highly profitable businesses," Vice-chairman Jeong Tak said. "We will make this year the first year of re-establishing the food business, and fortify our business foundation through offshore procurement and investment in assets in demand."
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Posco International Corporation published this content on 10 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 January 2023 23:35:29 UTC.
