14/04/2010 (Bernama), Kuala Lumpur - Kurnia Setia Bhd's wholly owned subsidiary, Sri Jelutung Palm Oil Mill Sdn Bhd (SJPOM), plans to construct a palm oil mill together with a compost fertilizer plant at its nearby Sri Jelutong Estate, Pekan, Pahang.

The 30-tonne per hour upgradable to 60-tonne per hour palm oil mill is estimated to cost RM30 million while the composting plant RM5 million

"These projects when completed are expected to contribute substantial turnover and profit to the group," the company said in a Bursa Malaysia filing on Wednesday.

SJPOM received approval from the Malaysia Palm Oil Board via a licence to begin constructing a crude palm oil mill and a compost fertilizer plant as part of its downstream diversification activities yesterday, it said.

The mill and plant will be due for commissioning by middle of 2011.

It said that recently, Kurnia Setia purchased 200 hectares of land from the Pahang Government Secretary Corporation for RM1.113 million by cash, and for the purpose of constructing the mill and plan, it had allocated 32 hectares.

SJPOM had received an Islamic banking facility from Maybank Islamic Bank for RM24 million for the project, and the facility will be secured by the land and corporate guarantee by Kurnia Setia.

The balance RM11.0 million will be financed by way of cash injection by SJPOM. The cash injection will have no material financial impact on the group.

The group's plantations, namely Paloh Hinai Estate, Sri Jelutung Estate and Aur Gading Estate, as well as nearby estates from the Pahang State Agriculture Industrial Development Board will be supplying the oil palm fruits/fresh fruit bunches to the mill.

"SJPOM is in the process of securing all the necessary approval from all the relevant authorities and technical know-how necessary for the implementation and construction of the mill and plant," it said.