03/08/05 (The Star) - IJM Plantations Bhd plans to set up a new palm oilmill in Sugut, Sandakan within the next 2½ years.Managing director and chief executive officer Velayuthan Tan said: "Wewill invest about RM30mil for the 30-tonne per hour mill to cater for theanticipated double-digit growth annually in our fresh fruit bunches (FFB)production over the next four years."

IJM Plantations had recently doubled output to 60 tonnes of crude palm oil(CPO) per hour from 30 tonnes per hour previously at each of its threepalm oil mills in Sugut to meet the group's growing crop production.

The three existing mills had a total FFB processing capacity of 165,000tonnes per hour or 1 million tonnes per year with an average oilextraction rate (OER) of 22%, Tan said after the company AGM and EGM inPetaling Jaya yesterday.

Its Sabang palm oil mill maintained another year of high OER at 23.6% lastyear - one of the highest in Sabah.

Tan said the group had allocated RM45mil in capital expenditure (capex)this year mainly for plantations development in Sandakan compared withover RM50mil capex last year.

"Our main focus is to nurture the young matured tree areas with ageprofile of between one and three years old," Tan said, adding that IJMPlantations was not discounting the possibility of exploring for new landbanks in east Malaysia.

As a medium-sized plantation player with total land bank of 29,646ha, thecompany's FFB production looks good especially with more areas coming intomaturity and prime age in Sugut plantations," he said.

As at March 31 this year, the total area planted with oil palm increasedto 24,401ha from 23,560ha previously. On the CPO outlook, Tan expectsprices to range between RM1,300 and RM1,400 per tonne till the middle ofnext year.

"Despite the ringgit de-pegging, the price trend will be heavilyinfluenced by the current poor weather conditions in majoroilseed-producing countries, soy bean harvest in the US and South Americaas well as the bio-diesel demand in Europe."