23/04/2013 (Proactive Investor UK) - DekelOil (LON:DKL) said construction of its 60 tonne an hour palm oil extraction mill in Côte d'Ivoire has begun – leaving the project on schedule for completion by the year-end.

Carrying out the turn-key contract is a team of specialist engineers from the Malaysian firm Modipalm.

Director Lincoln Moore said "With the Mill safely on site and the Modipalm team commencing its construction and installation, we are now one step closer to generating revenues from CPO production. 

“I look forward to updating shareholders on the construction process over the coming months."

Fully funded after its recent float, Dekel has set out a route to early and cash generative production.

It owns 51% of this vertically integrated project, which will have the capacity to produce 70,000 tonnes of palm oil a year from 27,000 hectares of mature estates farmed by local smallholders.

Supplementing that will be the company’s own estate, with 1,900 hectares already planted. The aim, eventually, is for 25-30% of the fruit to come from Dekel’s plantation.

Located just two hours from the international port of Abidjan, the operation at Ayanouan has a clear route to export the raw product.

But according to Moore, there is also a healthy domestic market for palm oil, which is a food industry staple, while the latest data reveals West Africa is currently importing 600,000-700,000 tonnes a year.

So, addressing this significant opportunity will be the first imperative before Dekel’s output is shipped off to Europe and further afield.

The company’s nursery operation helps to nurture the goodwill of the local farmers (as well as provide new stock for the plantations).

The state of the art-facilities create palms that can be planted in six months – which is three to six months earlier than the industry average – and take as little as two years to deliver their first yield.

The clincher, for the local population at least, is Dekel’s high quality palms are priced competitively when compared to other local suppliers.

“So when we open for sale the queues might be 100 metres long. It helps with our relationship with the small-holders,” explained Moore in a recent interview with Proactive.

Working with the 5,000 or so smallholders signed up by Dekel is just one leg of the plan.

It is also in the process of establishing its second project in Guitry, 180km from the coast where it holds rights over 24,000 hectares of land suitable for oil palm development.

The large majority of this land is old cocoa estates so the cost of development should also be cheaper than its West African neighbours.