Golden Agri-Resources JV opens 200 kilotonne oleochemicals plant in Indonesia

GOLDEN Agri-Resources has launched a 200 kilotonne-per-year oleochemicals plant in Indonesia, giving the world's second-largest palm oil producer its first major downstream fatty alcohol facility.

The plant is owned by Sinar Mas Cepsa, a joint venture between Golden Agri, the palm oil unit of Indonesia's Sinar Mas group, and Spain-based oil and gas group Cepsa, and it represents a 300 million euro (S$484 million) investment from its owners, according to a statement by Golden Agri.

About 160 kilotonnes of the plant's annual capacity is designated for fatty alcohol, which is a key ingredient in liquid soaps and personal care products, Sinar Mas Cepsa deputy chief executive Jose Maria Solana told reporters in Singapore. The remaining 40 kilotonne of capacity will come from fatty acids, which are more suitable for powdered detergents, and glycerine. The mix can be adjusted, however, depending on market conditions. The plant will also supply to the spot market.

The plant sits in Dumai on the Indonesian island of Sumatra, and will use crude palm kernel oil from Golden Agri's nearby Lubuk Gaung refinery. It will also have its own logistics and power facilities on site, which is essential in a region that lacks major infrastructure.

The plant already has a number of contracts from Asia, Europe and the Americas, although Asia will be its main market, Mr Solana said. The facility is operating at 50 to 60 per cent capacity as it works on qualifying and setting the specifications for the full range of its products, he added. It will also serve Sinar Mas Cepsa's existing surfactant plant in Germany, which serves markets in Eastern and Western Europe.

The new facility will represent a significant boost to Golden Agri's oleochemical production output. The company has an existing oleochemical plant, but it produces mainly fatty acids and glycerine, with an annual capacity of 240 kilotonnes. In 2016, Golden Agri sold US$197 million of oleochemical products globally, split between US$31.4 million in Indonesia and US$165.6 million elsewhere.

The global fatty alcohol market is expected to reach three million tonnes with capacity just under 4.5 million tonnes in 2017, according to market research firm LMC International. By that estimate, Golden Agri's new plant would represent just under 4 per cent of global capacity.