Si­nar Mas Cepsa starts op­er­a­tion of plant

The Jakarta Post - - BUSINESS - Mar­chio Ir­fan Gor­biano

Si­nar Mas Cepsa, a joint ven­ture be­tween lo­cal palm oil gi­ant Si­nar Mas Agribusi­ness and Food and Spain en­ergy group Com­pañía Es­pañola de Petróleos (Cepsa), has com­menced the op­er­a­tion of its (US$360 mil­lion) oleo­chem­i­cal plant.

Lo­cated on 22 hectares in Dumai, Riau, the new fa­cil­ity will be able to pro­duce up to 160,000 tons of fatty al­co­hols, 20,000 tons of fatty acids and 20,000 tons of glyc­erin each year, Si­nar Mas Cepsa deputy CEO José María Solana Deza said dur­ing the in­au­gu­ra­tion of the plant on Thurs­day.

The pro­duc­tion ca­pac­ity for each prod­uct, how­ever, would be flex­i­ble and there­fore, could be ad­justed to mar­ket de­mand, he added.

With such ca­pac­i­ties, the plant is set to an­nu­ally process up to 200,000 tons of ker­nel oil, a palm oil de­riv­a­tive, that will be sourced from Si­nar Mas’ Lubuk Gaung fac­tory, lo­cated next to it.

The raw ma­te­rial is sus­tain­ably cer­ti­fied un­der the Round­table on Sus­tain­able Palm Oil (RSPO).

The new oleo­chem­i­cal plant adds to the list of palm oil pro­cess­ing fa­cil­i­ties built in In­done­sia in re­cent years as in­vestors take ad­van­tage of var­i­ous in­cen­tives of­fered by the gov­ern­ment to spur the down­stream in­dus­try, such as ex­port taxes, tax hol­i­days and tax al­lowances.

Con­se­quently, the coun­try now sees a larger pro­por­tion of palm oil pro­cessed prod­ucts, in­clud­ing fatty al­co­hols, an in­gre­di­ent for wide ap­pli­ca­tions from cos­met­ics to de­ter­gents, in ex­ports com­pared to crude palm oil (CPO).

Cepsa CEO Pe­dro Miro said the in­au­gu­ra­tion of the plant was a “mile­stone” for his com­pany, while its cur­rent joint busi­ness ven­ture with Si­nar Mas fit Cepsa’s fu­ture plans.

“It’s a clear ex­am­ple of our will to re­bal­ance our port­fo­lio [with] more em­pha­sis on the chem­i­cal fea­ture,” he said.

Si­n­ar­mas Group chair­man Franky Oes­man Wi­jaya, who also at­tended the in­au­gu­ra­tion, said In­done­sia was uniquely placed to ben­e­fit from the oleo­chem­i­cal mar­ket ow­ing to the fast-grow­ing do­mes­tic house­hold and per­sonal care in­dus­try as well as the sim­i­larly ro­bustly ex­pand­ing mar­kets of China and In­dia.

Pre­sented by such op­por­tu­ni­ties, he hoped Si­nar Mas Cepsa could be­come a lead­ing global pro­ducer of fatty al­co­hols.

“By com­bin­ing Si­nar Mas’ com­mit­ment to sus­tain­able palm oil pro­duc­tion with CEPSA’s ex­pe­ri­ence in sur­fac­tant, we be­lieve Si­nar Mas Cepsa can grow as a com­pet­i­tive and ul­ti­mately world-lead­ing provider of sus­tain­ably pro­duced fatty al­co­hol and its de­riv­a­tives,” he said.

Up to 20 per­cent of the plant’s out­put would be sold in the do­mes­tic mar­ket, while the ma­jor­ity of the rest would be shipped over­seas, Franky added.

Franky fur­ther said the man­u­fac­tur­ing of palm oil prod­ucts through co­op­er­a­tion with an Euro­pean coun­try would pave the way for Si­nar Mas to gain a stronger pres­ence in the Euro­pean mar­ket.

“The Euro­pean mar­ket is im­por­tant. With our part­ner and our sus­tain­able [prac­tices], we hope that it will bring a good rep­u­ta­tion to In­done­sia,” he said.

In­done­sia, the world’s largest pro­ducer of palm oil, has faced re­cur­rent crit­i­cism for de­for­esta­tion caused by the mas­sive ex­pan­sion of oil palm plan­ta­tions.

In the first phase, the plant will op­er­ate at 70 per­cent in­stalled ca­pac­ity, which would be fur­ther raised in line with mar­ket de­mand, Franky added.

In­dus­try Min­is­ter Air­langga Har­tarto, who also at­tended the event, wel­comed the fac­tory, say­ing it would con­trib­ute to the lo­cal value-added in­dus­try.

“[Si­nar Mas’] co­op­er­a­tion with Span­ish in­vestors will hope­fully open the Euro­pean mar­ket [to In­done­sia],” he said.

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