Leading palm oil supplier eyes Africa for expansion plans

By Jane Byrne

- Last updated on GMT

Related tags Palm oil New britain palm oil

Leading palm oil producer Sime Darby, looking to meet the increased global demand for the key component of many baked goods, is reported to be involved in an expansion project in Africa.

Palm oil is the most commonly used vegetable oil worldwide, used in processed foods like biscuits margarine, and ice cream and as a flavouring agent and texturiser, and in cosmetics and personal care products like soap and lipstick. It is also used for biofuels.

And Malaysian group Sime, a member of the Roundtable on Sustainable Palm Oil (RSPO), is considering plans for a 300,000 hectare plantation in Cameroon as the industry rushes to develop palm oil production in Africa in response to record high prices for the ingredient, reports the FinancialTimes.

However, Mohd Bakke Salleh, Sime’s chief executive, stressed that such a plantation would take many years to develop, with planting beginning at about 5,000ha a year and peaking at no more than 15,000ha.

As demand for palm oil has increased, so have concerns about its sustainability. Where palm oil plantation areas have expanded in producing countries this has been at the expense of tropical rainforests. Labour relations and use of pesticides at plantations are also causing concern.

The Indonesian government has implemented a hold on commercial development of forests and peat lands until January 2012 in a bid to conserve rainforest in the country, which accounts for half of global palm oil production.

Meanwhile, higher prices in the second half of the year and a contribution from recent Asian acquisition Kula Palm Oil boosted revenue growth last year for New Britain Palm Oil (NBPO) - a supplier of “traceable and certified sustainable palm oil.”

Crude palm oil prices soared to $1,070 per tonne by late November, compared with $760-$920 for the first nine months of the year.
The industrial producer of palm oil yesterday reported that in the 12 months to December 2010, revenue increased by 45 per cent to $470.5m from $323.8m the year before, as oil shipments rose 26 per cent from a year earlier to a record 455,122 tonnes.

“The robust fundamentals of the industry, together with the increasing demand for the highest quality, traceable and certified sustainable palm oil rather than a certificate based trading system provide confidence in a strong future for the group,”​ claimed Antonio Monteiro De Castro, chairman of NBPO.

Last August saw NBPO, which has secured a deal to supply UK manufacturer United Biscuits, opened the first palm oil refinery in Europe with a traceable and sustainable supply chain. And the company reported in January that an extension of its Papua New Guinea refinery to handle products required by confectionery giant Ferrero should be operational by mid 2011.

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