Sime Darby To Build RM330 Million Refinery Complex In North Port, Port Klang
Press Release
KUALA LUMPUR, 15 July 2008 – Sime Darby Berhad aims to strengthen its position in the palm oil downstream business in South East Asia by building a new RM330 million refinery in North Port, Port Klang.
Its President & Group Chief Executive Dato’ Seri Ahmad Zubir Murshid said that the Board of Directors of Sime Darby agreed in May to construct the North Port refinery complex which is expected to be completed by mid 2010.
He said Sime Darby plans to use up all of its 600,000 MT of CPO production in the central region of Peninsular Malaysia for this new plant.
The investment in North Port involves the construction of a 2,000 MT per day refinery plant and includes a kernel crushing plant with storage tank facilities. This translates into approximately 660,000 MT worth of additional refining capacity for Sime Darby's plantation division in the central region of Peninsular Malaysia.
Dato’ Seri Ahmad Zubir also said that the decision was made due to the increase in global demand for refined oil palm products and also due to Sime Darby’s large CPO supply base in Peninsular Malaysia after the merger.
"The number of refineries in the central region of Peninsular Malaysia is very limited and most of them have small or no exposure in upstream businesses. However, these refinery players have high bargaining power and can squeeze upstream players like Sime Darby," he said.
Sime Darby currently has 600,000 hectares of land bank under its belt, where approximately 530,000 hectares are planted and currently at its prime age. Sime Darby's annual CPO production in total is 2.4 million MT, whereas their total refining capacity in Malaysia is only approximately 0.8 million MT. In Peninsular Malaysia alone, Sime Darby's CPO production is over more than 1 million MT.
Dato’ Seri Ahmad Zubir said that currently in Malaysia, Sime Darby has refineries in Banting (Golden Jomalina), Pasir Gudang (Kempas Edible Oil) and Bintulu (Austral Edible Oil), with a total annual capacity of over 800,000 MT per annum. With North Port, Sime Darby's annual total refining capacity will increase to approximately 1.5 million MT in Malaysia.
"North Port will give us scale and the opportunity to use new technologies which will further improve our productivity and efficiency. This expansion plan is only the beginning. Our North Port project is part of a bigger picture that will unfold.
“The strategic move will enable Sime Darby to have the flexibility to sell our oil palm products according to market demand. We also have plans to expand our refining capacity in Indonesia, China, Europe and Africa to match our upstream expansion plans,” he said.