Sinar Mas Cepsa starts operation of plant
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.