19/1/07 (The Star) PETALING JAYA - PPB Oil Palms Bhd is poised this year to tap into Singapore-based Wilmar group’s three new palm-based biodiesel plants in Indonesia, which have a combined annual production capacity of 1.15 million tonnes.

This opportunity arises through Wilmar’s proposed merger with the Kuok group’s oil palm plantation, edible oils, grains and related businesses held by PPB Oil Palms, PGEO Group Sdn Bhd and Kuok Oils and Grains Pte Ltd in a deal worth US$2.7bil announced last December.

An industry source told StarBiz that Wilmar’s two new biodiesel plants, which involved a total investment of US$35mil, were expected to begin operations in Riau province in the second and third quarters of this year.

Each plant could produce up to 350,000 tonnes of biodiesel per year, the source said.

The Wilmar group’s first biodiesel plant in Indonesia, which is located in the same vicinity, started operation last month. It has expanded its production capacity to 350,000 tonnes from 250,000 tonnes per year through an additional investment of US$20mil.

“The plant’s first-year production has been fully committed. It has also received substantial orders for its second-year production,” added the source.

The biodiesel production is for both the domestic market and export. All three plants are built within the group’s integrated manufacturing complex with its own port facility in Riau.

“The three new plants will position the enlarged Wilmar group as one of the world’s largest processors and merchandisers of palm-based biodiesel,” said the source.

PPB Oil Palms also stands to benefit from Wilmar’s recent proposal to acquire five Indonesian plantation companies with a combined land bank of about 85,000ha in Kalimantan that is suitable for oil palm plantations.

The source said the acquisitions would cost about US$5.8mil.

“This expansion will be funded by internally generated funds and is not expected to have any material impact on the companies within the group for the financial year ended Dec 31, 2006.”

The source said the Wilmar group planned to plant at least 15,000ha per annum and to complete its planting programme for the newly acquired land bank within seven years.

This will increase the group’s total plantation land bank to about 573,405ha (160,786ha planted