Sime Darby Plantations makes foray into Liberia

The Star | 28 May 2011
By HANIM ADNAN
nem@thestar.com.my

MONROVIA (Liberia): Investing in a West African nation like Liberia may sound like a risky venture but for Sime Darby Plantations Sdn Bhd, it is taking it all in its stride as the resource rich republic has the pre-requisites for oil palm and rubber plantations.

“Risks can happen anywhere even if you go to the moon,” said Sime Darby Bhd chairman Tun Musa Hitam.

International oil palm plantation companies, which are facing severe land scarcity, are flocking to Liberia which to date is believed to have made available 1.5 million ha for oil palm cultivation.

Plantation companies that are making large-scaled plantations include Golden VerOleum from Indonesia, Equatorial Palm Oil from Britain and Sime Darby.

For Sime Darby, it will be a long-term venture, Musa told a group of Malaysian journalists covering Sime Darby's first oil palm planting ceremony in Matambo Estate, Grand Cape Mount county here last week.

The Sime Darby plantations venture in the republic is the third tour of duty as the previous two attempts were interrupted by wars.

After a 14-year civil war, peace seems to have been restored in Liberia under a power-sharing government in 2003.

With the United Nation peacekeeping troops having a strong presence in the republic and the new government's liberal business policy to encourage foreign investments, Liberia is now attracting big names from the international investment circle.

Investors from Britain, China, India, Indonesia and the United States were keen to tap into Liberia's rich resources including raw timber, rubber, iron ore, gold, diamonds as well as sprawling agriculture land suitable for plantations.

International investors which have made their presence in Liberia included steel giant AccelorMittal with a US$1.5bil investment, China Union Group at US$2.6bil and Australian mining giant BHP Biliton at an estimated US$3bil.

The former Kumpulan Guthrie had operated rubber plantations in the republic between 1981 and 2002.

However, two civil wars had forced Guthrie to withdraw from the country. With the PNB plantation-GLCs merger - Sime Darby, Guthrie and Golden Hope, the new Sime Darby Bhd was formed in 2007.

“Sime Darby has a big commitment to develop these plantations and to ensure its sustainable developmen,” Musa said.

In 2009, Sime Darby Plantation had been granted 220,000ha under a 63-year concession agreement with the Liberian government to develop oil palm and rubber plantations in four counties namely Grand Cape Mount, Gbarpolu, Bong and Bomi.

“Our pledge to invest US$3.1bil over the next 15 years in the republic is a very serious commitment indeed. More importantly once the entire concession area is fully operational, we hope to be able to employ about 35,000 people in Liberia,” Musa said.

Sime Darby Plantation produces 2.4 million tonnes of crude palm oil (CPO) annually, of which over one million tonnes are certified sustainable palm oil.

“We expects a fully operational upstream capacity in West Africa will provide Sime Darby Plantation with greater access to markets on the Atlantic Rim, Europe and Africa thus offering significant savings in logistics and distribution,” Musa added.

Sime Darby head of Plantation Upstream Malaysia Helmy Othman Basha, in a media briefing near Monrovia after the seedling planting ceremony, said plans were being mapped out to fast-track the planting of oil palm in the entire concession area secured by the group.

“We aim to complete ahead of the initial timeline target. Hopefully, we can finish by 2022 or 2023 instead of 2030,” he said.

For the first 11 years, Sime Darby Plantation Liberia is targeting to plant about 120,000ha.

“We expect to see the first drop of CPO from the Liberian estates in three years and we intend to set up the first palm oil mill by 2013,” said Sime Darby head of Plantation Upstream Liberia Azmi Jaafar.

In total, there will be about 55 estates and around 20 palm oil mills to accommodate the entire Sime Darby plantations concession area in Liberia.

“For each 15,000ha, Sime Darby will be putting up one mill and later, a refinery,” added Azmi.

Azmi expected about 90% of the CPO production to be for exports.

Operational-wise, Helmy said that the CPO cost of production (COP) in the republic was about 10% to 15% higher than the Malaysian planters' COP at about RM1,100 to RM1,200 per tonne.

Of the total COP, fertiliser represented about 30%.

Helmy pointed out that the targeted oil extraction rate is slated at about 21% to 22% in the Liberia estates with targeted yield at 22 tonnes to 23 tonnes per ha per year.

The Liberia plantation landbank size at 220,00ha marked Sime Darby's third largest after its landbank in Malaysia (359,845ha) and Indonesia (288,057ha)
Source: The Star