Financial Times

Carsons expands Indonesian palm oil mill
The Carson Cumberbatch group has decided to go ahead with plans to expand the capacity of its palm oil production plant in Indonesia with the increase in crop as most of its new plantations come into bearing.

The company, whose shares and those of its palm oil subsidiaries shot up in the Colombo bourse recently on speculation, is already generating a big part of its profits from its plantations of 12,600 hectares in Central Kalimantan.

Carsons is expected to use the US$30 million earned from the sale of an estate near the Malaysian capital Kuala Lampur owned by a subsidiary, The Bukit Darah Company Ltd., for planned expansion here as well as overseas.

The capacity of the oil mill run by the subsidiary, PT Agro Indomas, now 45 tonnes per hour, is to be increased to 60 MT an hour this year, to process the increased crop with almost the entirety of the acreage now being planted and palms bearing fruit. The mill will be expanded to 90 MT an hour after 2007/08.

Carson's Indonesian holdings are much bigger and yields much higher than those of its Malaysian estates, and have been generating good profits with palm oil prices being strong in recent years.

Demand in the global edible oil market has been driven by increased consumption in India and China. The company aims to be a low cost producer so it can survive even when world market prices for palm oil fall as they are likely to given the cyclical nature of commodity markets.

It was the first to plant oil palm in Sri Lanka, in the Nakiadeniya estate, which was later nationalized. But the company has no plans to return to oil palm cultivation here because not enough land is available, the terrain and climate are not considered the best for the crop and yields are much less than in South East Asia.

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