MARKET DEVELOPMENT
Dharma Satya Nusantara Sets Capital Spending at $80m for 2014
Dharma Satya Nusantara Sets Capital Spending at $80m for 2014
29/01/2014 (Jakarta Globe) - Dharma Satya Nusantara, a palm oil producer affiliated to businessman Theodore Permadi Rachmat, plans $80 million in capital expenditure this year to support expansion.
Andrianto Oetomo, the company’s chief financial officer, told reporters on Tuesday that the capital expenditure will be used mostly for palm oil plantations.
“We will expand our cultivation area, complete the construction of a palm oil mill we started last year as well as the building of another palm oil mill this year,” Andrianto said.
The company started work on the palm oil mill at its East Kalimantan plantation area in the third quarter last year and will commence with another one in the same area in the second quarter of this year.
Each of the mills will have a capacity of 60 metric tons of palm fruit per hour and will cost $20 million each. The mills will add to DSN’s five existing palm oil mills.
Upon completion of the latest mill in the third quarter 2015, the company will have total processing capacity of 450,000 tons per hour.
DSN will also extend its plantation area. The company has about 110,000 hectares of land and a combined cultivated area of 70,000 hectares in Kalimantan.
“Most of our land bank is located at our plantation in West Kalimantan and this is where we will do most of our cultivation this year,” Andrianto said, adding that DSN’s 110,000-hectare land bank would be enough for the company’s expansion over the next 10 years.
He said some of DSN’s capex will be funded by a bank loan from Bank Central Asia.
He did not elaborate on other options.
DSN’s crude palm oil production grew 31 percent to 335,730 tons in 2013 from 256,971 ton a year earlier.
This year, Andrianto said the company expects to see another solid growth in CPO production, but declined to mention any production targets.
“I believe the production will continue to grow since our palm trees are producing more fruits and more trees are also maturing,” Andrianto said. Of the 70,000 hectares under cultivation, 52,874 hectares already have mature plantations.
The company is also optimistic on the price outlook for CPO this year.
DSN director Timotheus Arifin said last year the company achieved a Rp 7 million ($574) per ton average selling price for its CPO, down from the Rp 7.2 million per ton average in 2012.
But he said he noticed an improvement in in CPO price in the past few months, .
In the middle of last year, he said DSN’s selling price was as low as Rp 6 million per ton, but it improved to about Rp 8 million per ton in November and December.
“Now, the price is still maintained above Rp 8 million per ton, but it remains to be seen how the price will move for the rest of the year, Timotheus said.
“At least we started the year with a good price. Last year we started with a really low price,” he added.
He did not disclose the selling price for January last year.
Andrianto added that the CPO price on the local market started to improve because the government “shows seriousness” in promoting the use of CPO as an alternative fuel. He claimed the CPO price that is set at North Sumatra’s Belawan Port — the benchmark for the country’s CPO market — rose higher than the price set in Malaysia.
Andrianto Oetomo, the company’s chief financial officer, told reporters on Tuesday that the capital expenditure will be used mostly for palm oil plantations.
“We will expand our cultivation area, complete the construction of a palm oil mill we started last year as well as the building of another palm oil mill this year,” Andrianto said.
The company started work on the palm oil mill at its East Kalimantan plantation area in the third quarter last year and will commence with another one in the same area in the second quarter of this year.
Each of the mills will have a capacity of 60 metric tons of palm fruit per hour and will cost $20 million each. The mills will add to DSN’s five existing palm oil mills.
Upon completion of the latest mill in the third quarter 2015, the company will have total processing capacity of 450,000 tons per hour.
DSN will also extend its plantation area. The company has about 110,000 hectares of land and a combined cultivated area of 70,000 hectares in Kalimantan.
“Most of our land bank is located at our plantation in West Kalimantan and this is where we will do most of our cultivation this year,” Andrianto said, adding that DSN’s 110,000-hectare land bank would be enough for the company’s expansion over the next 10 years.
He said some of DSN’s capex will be funded by a bank loan from Bank Central Asia.
He did not elaborate on other options.
DSN’s crude palm oil production grew 31 percent to 335,730 tons in 2013 from 256,971 ton a year earlier.
This year, Andrianto said the company expects to see another solid growth in CPO production, but declined to mention any production targets.
“I believe the production will continue to grow since our palm trees are producing more fruits and more trees are also maturing,” Andrianto said. Of the 70,000 hectares under cultivation, 52,874 hectares already have mature plantations.
The company is also optimistic on the price outlook for CPO this year.
DSN director Timotheus Arifin said last year the company achieved a Rp 7 million ($574) per ton average selling price for its CPO, down from the Rp 7.2 million per ton average in 2012.
But he said he noticed an improvement in in CPO price in the past few months, .
In the middle of last year, he said DSN’s selling price was as low as Rp 6 million per ton, but it improved to about Rp 8 million per ton in November and December.
“Now, the price is still maintained above Rp 8 million per ton, but it remains to be seen how the price will move for the rest of the year, Timotheus said.
“At least we started the year with a good price. Last year we started with a really low price,” he added.
He did not disclose the selling price for January last year.
Andrianto added that the CPO price on the local market started to improve because the government “shows seriousness” in promoting the use of CPO as an alternative fuel. He claimed the CPO price that is set at North Sumatra’s Belawan Port — the benchmark for the country’s CPO market — rose higher than the price set in Malaysia.