Following the Indonesian government’s July 16 establishment of a Crude Palm Oil (CPO) Fund designed to support the continuing replacement of fossil energy use in the country, Singapore-based Golden Agri Resources Ltd. announced an investment of $200 million to build two new biodiesel plants in Marunda, North Jakarta and Tarjun in South Kalimantan, Indonesia.

 

The two plants, which are scheduled to be completed by 2016, are expected to have a combined capacity of 300,000 tons of biodiesel per year.

 

Golden Agri is currently in talks with the state-owned energy company, PT Pertamina, which is being counted as the main buyer of the plants’ output.

 

Although CPO prices are now under pressure, Golden Agri Resources (GAR) chairman and chief executive officer, Franky Widjaja said in a statement that the long-term outlook for the CPO sector is still positive.

 

The group has seen strong quarterly results for the first two quarters of this year. In the first half of 2015, GAR and its subsidiaries posted revenues of $3.4 billion, earnings before interest, tax, depreciation and amortization (EBITDA) of $273 million, and net profits of $56 million. In the second quarter alone, GAR’s revenues saw a quarter on quarter increase of 18%, and net profits increased 125% to reach $39 million.

 

“We continue to focus on optimizing our integrated value chain, yield improvement, cost efficiency and implementation of our sustainability initiatives,” said Widjaja.

 

As a result of an improved oilseed market in China, GAR’s oilseed and others divisions continued to show positive results, returning an EBITDA of $3.3 million in the second quarter of this year, and a year-to-date EBITDA of $6.5 million. And as a result of the completion of new downstream capabilities, GAR’s total consolidated assets increased to a value of $14.9 billion for the year.

 

The group’s total planted acreage as of the end of June totaled 484,472 hectares, with 101,089 hectares being plasma smallholder plantations, and the average age of the group’s oil palm trees is an encouraging 15 years.

 

Output for the second quarter 2015 totaled 717,000 tons – a quarter on quarter increase of 13%; but if looking at production for the first half of 2015, output for the period was lower than the same period a year before due to dry growing conditions.