Olam International Ltd., (SGX: O32) has secured loans US$176 million expand its Indonesia cocoa processing facility managed by Far East Agri Pte., Ltd., Vietnam, Papua New Guinea, and Uganda, said the company today (04/29) - Photo by the Company

JAKARTA (TheInsiderStories) – Asia’s largest and the world’s fourth largest sugar producer Mitr Phol Sugar Corp., acquires a 50.0 per cent stake Olam Intenational Ltd.‘s sugar refinery in Indonesia. Both of the companies to jointly explore the development of a green-field sugar mill and refining in the country.

In a statement released on Dec. 18, Olam said Mitr Phol will invest US$100 million for a 50.0 per cent stake in Olam’s wholly-owned subsidiary Far East Agri Pte Ltd, which operates a sugar refinery in Indonesia, PT Dharmapala Usaha Sukses in Cilacap, Central Java.

Olam acquired 100 per cent shares of Dharmapala on Oct. 7, 2007 through direct wholly-owned subsidiary Far East Agri. 

Joe Kenny, Managing Director and CEO for Sugar & Dairy Olam explained: “Our potential expansion into sugar milling will transform our overall participation in Indonesia’s sugar industry, which offers attractive investment and return opportunities due to its growing demand and persistent supply deficit.”

Under the new agreement, Far East will explore the development of a green-field sugar milling facility in East Java. Upon completion in 2020, the sugar mill will source 1.2 million metric tonnes of cane from farmers.

Krisda Monthienvichienchai, CEO & President of Mitr Phol added: “Our shared belief in the country’s potential and in creating long-term value will underpin our growth strategy there. We look forward to playing a meaningful role in helping Indonesia become self-sufficient in sugar production by working closely with each other, the authorities, farmers and all stakeholders.”

Indonesia is predicted to continue importing sugar until 2019 because of the ongoing revitalization of sugar factories run by state-owned sugar company. The revitalization process of several factories had been completed, but they could only produce 50 percent of their capacity because the country’s sugarcane farms were still in the process of expansion

The national sugar supply was sufficient for early 2017 after an additional 600,000 tons had been imported last year. However, later this year the deficit could reach 500,000 tons, he added.

Its estimated that after the state-owned company had been revitalized, national sugar production would reach up to 3.2 million tons by 2019, which would meet domestic consumption of 235,000 tons per month.

Mitr Phol is the world’s fourth largest and Asia’s largest sugar producer with 16 sugar mills, eight power plants and four ethanol distilleries, contracting 143,000 farmers across Thailand, Laos, China and Australia. It is also Asia’s largest bio-energy producer and has business interests in wood substitute materials, fertilisers and agriculture-related logistics.

While Olam operating across the value chain in 70 countries, supplying various products across 18 platforms to 23,000 customers worldwide.

Written by Linda Silaen, Email: linda.silaen@theinsiderstories.com