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Sampoerna Agro aims for 8% capacity increase

Publicly listed plantation firm PT Sampoerna Agro (SGRO) expects more palm oil production next year, as its eighth factory in West Kalimantan is scheduled for completion and will boost the companys oil palm processing capacity by 8 percent. Sampoerna Agros annual processing capacity is expected to reach 2J6 million tons of fresh palm fruit bunches (TBS) by the second half of next year, an 8 percent increase from 2 million tons this year. “We maintain our commitment to long-term investment. A part of that commitment is the new oil palm factor} in West Kalimantan, which has reached 30 percent completion,” Sampoerna Agro president director Marc Louette said at a press conference in the Indonesia Stock Exchange (IDX) building on Monday. The new factor} 1 , estimated to cost Rp 100 billion (USS7.5 million) to Rp 120 billion in investment, would have an hourly capacity of 30 tons of palm fruit, which is mostly processed into a biodiesel mix and vegetable oil, and sold at local markets. Sampoerna Agro head of investor relations Michael Kesuma said a big part of the firms palm oil goes to biodiesel, amid increasing demand for the alternative fuel since 2015. The first biodiesel mix introduced was B15, a mix of 75 percent diesel and 15 percent palm oil substance, and will be increased to B30 in 2025 to comprise 30 percent palm oil substance, providing a good outlook for palm oil demand, Michael said. With such a positive projection, Sampoerna Agro is committed to allocating 2,000 to 4,000 hectares of its land for planting new oil palm, rubber and sago trees per year. It now has 167,000 ha of plantations, 82 percent of which is dedicated to palm oil and 10 percent to rubber. However, the firm still faces challenges in proving that its business is environmentally friendly after its subsidiary, PT National Sago Prima, was fined Rp 1 trillion last year in a forest fire case. (THE JAKARTA POST)