History
Anglo-Eastern Plantations Plc was formed and floated on the London Stock Exchange in 1985 to acquire and develop four estates in North Sumatra, previously owned by several UK based plantation companies.
The largest of these estates was Tasik, whose development, as a 6,000 hectare (ha) oil palm estate, commenced in 1983. The other three smaller estates, totalling 3,700ha comprising rubber and cocoa, had been established in the 1920s. Funds raised from the flotation were used to complete the development of Tasik, where a 45mt/hr palm oil mill was commissioned in 1991, later upgraded to 60mt/hr in 2005.
PT Tasik in North Sumatra
In 1993 Genton International (see Shareholders) acquired a controlling holding in Anglo-Eastern. Following a one-for-two rights issue in 1995 the company embarked on an expansion programme comprising:
- acquisition of a small (800ha) oil palm estate (Anak Tasik) in North Sumatra in 1995;
- acquisition in 1995 and development of land totalling 17,600ha in the province of Bengkulu in southern Sumatra;
- acquisition in 1995 of an immature oil palm estate in Peninsular Malaysia.
In Bengkulu a 40mt/hr mill was commissioned in 2002 and upgraded to 60mt/hr in 2004. In June 2007, 15,004 ha had been planted.
Mill in Bengkulu
In March 2004 the company acquired a neglected oil palm estate of 4,300 ha, called Bina Pitri located in the province of Riau, about 180km south of Tasik. Consideration was $10m. Rights to a further 900ha of land were acquired in 2004 and planted in 2005 bringing the planted area of this property to 4,940 ha. The formerly neglected areas have been rehabilitated. A 30mt/hr mill (expandable to 60mt/hr) was completed in April 2007.
In December 2004 a 20mt/hr mill was commissioned on Blankahan estate, one of the three smaller estates originally acquired in 1985; this mill processes crop from those estates, which were substantially converted to oil palm in 1992/3. All remaining cocoa was removed in 2007. A small area of rubber has been retained.
In December 2004 the company acquired the rights over 4,200ha of vacant land, called Labuhan Bilik, about 130km north of Tasik, at a cost of $0.4m, and has added 1,336 ha since then. In June 2007 1,629 ha had been planted and the area was fully planted in year 2009.
PT HPP in Labuhan Bilik
In June 2007 the company acquired another neglected oil palm estate of 4,470 ha, Cahaya Pelita Andhika, of which about 1,020 ha were planted and mature. The estate is located on the west coast of North Sumatra, about 180km from the nearest existing group estate, Tasik. The planted areas were rehabilitated and the unplanted areas were planted over five years after acquisition. Until a mill is built, crops are processed at Tasik.
In December 2007 the group acquired two blocks of lands rights. The first comprises 26,000 ha in the province of Central Kalimantan and the second consists of 7,000 ha in Bangka Island. In January 2008 a further 15,000 ha was acquired in Bengkulu, near to the group's existing estates. All three areas are scrub and previously logged secondary forest. It is estimated that of the total land area, 20,000 ha is plantable. Planting are done progressively starting in 2009.
In 2008, the group acquired a 95% equity interest in PT Riau Agrindo Agung (RAA), an Indonesian company owning the rights to 15,000 ha of vacant land in Bengkulu, and a 95% equity interest in PT Empat Lawang Agro Perkasa (ELAP) and PT Karya Kencana Sentosa Tiga (KKST); two Indonesian companies which hold the rights to 14,100 ha and 16,000 ha respectively in South Sumatra. The total addition of 45,100 ha brings the group's total landholding to 132,000 ha from 86,900 ha in the previous year. These new properties all have "rights to occupy" (Izin Lokasi) which will be converted to a formal title of rights (Hak Guna Usaha (HGU)).
In 2009, we succeeded in getting the crucial land conversion permit from the Indonesian Forestry Department in Central Kalimantan project.
In 2010, we planted 7,580 hectares of oil palm mainly in Kalimantan, boosting our planted area by 16% to 52,000 hectares. In the same year, we acquired PT Kahayan with the initial "Izin Lokasi" area of 17,500 hectares.
PT KAP in Central Kalimantan
The new Sumindo mill (45 MT/hour) was commissioned in May 2010. Construction work to increase Blankahan mill processing capacity from 25 MT/hour to 40 MT/hour was started in December 2010 and completed in 2011 at a cost of $1.5 million.
In 2011, we planted 4,800 hectares of oil palm mainly in Kalimantan, boosting our planted area by 9% to 57,100 hectares. New plantings remained behind planned schedule due to adverse dry weather conditions in South Sumatra and Central Kalimantan, alongside with certain hold-up in issuing of necessary permits due to the introduced timber cutting licenses ("IPK").
The Group's had invested $4.5million in the biogas and biomass project for one of the mills in North Sumatera of which civil works for the plant commenced in the fourth quarter of 2012 and the whole project was completed in 2014. This project enhances the waste management treatment of the mill and at the same time mitigates emissions of biogas. The successful implementation and running of this project will pave the way for further similar undertakings for the rest of the Group's mills.In 2012, the Group planted 1,900ha of oil palm mainly in Kalimantan, boosting planted area by 3% to 59,000ha. New plantings remained behind schedule due to protracted negotiations over settlement of land compensation with villagers and a delay in the issuance of land release permit (Izin Pelepasan) for two plantations. However, one of these plantations has obtained the necessary permit and clearing of land for planting are carried out progressively.
The First of our Four Biogas Plants (North Sumatra)
Permits for the construction of palm oil mills in North Sumatera and Central Kalimantan were held up by local authorities in 2012. The earthworks for the Central Kalimantan mill was commenced in fourth quarter of 2012 but was disrupted by heavy rainfall in the second quarter of 2013. The mill construction was finally completed in the second quarter of 2015. It began commercial operation in the third quarter with an initial capacity to process FFB at a rate of 45mt/hr.
In 2015, the Group opened up new land and planted 1,826ha of oil palm mainly in Kalimantan, boosting planted area including Plasma by 3% to 65,100ha (2014: 63,500ha). This excludes the replanting of 1,423ha of oil palm in North Sumatera. Another 166ha of ageing rubber trees were replanted with oil palm.
In 2016, the Group has completed 1,606ha of new planting of oil palm mainly in Kalimantan, boasting planted area including Plasma by 2.4% to 66,670ha in addition to the replanting of 1,516ha of oil palm in North Sumatera.
Besides, two more biogas plants in Bengkulu and Kalimantan are in the final stages of construction and are estimated to cost a total of $6.8 million. Biogas engines have been installed with the ancillary works covering gas piping and electrical works still in progress. The testing and commissioning should be completed soon and the biogas plants are expected to be operational from the second quarter of 2017. The plants when completed are expected to generate a combined 3 Megawatt of electrical power. A surplus of 15.6 million kWh of electricity worth $1.2 million is projected to be generated per year which the Group intends to sell to the state electricity company. The use of clean energy in the mills will further reduce their reliance on fossil fuels and improve the Group's carbon foot print.
Negotiations to sell the surplus power estimated in excess of 5 million kWh per year to the Indonesian National Electricity Company from its new biogas plant in North Sumatera has been approved by the local authority in January 2017 after the completion of a feasibility study and all the required permits.
In 2017, the Group opened up new land and planted 1,808ha of oil palm mainly in Kalimantan, boasting planted area including smallholder cooperative scheme, known as Plasma, by 2.5% to 68,310ha (2016: 66,670ha). This excludes the replanting of 1,694ha of oil palm in North Sumatera. New plantings remain behind schedule due to delays in finalising settlement of land compensation with villagers in South Sumatera, Bangka and Kalimantan. The villagers seek compensation beyond what the Group considered fair and reasonable resulting in protracted negotiations.
The 2 megawatt biogas plants in Bengkulu are supplying electricity to the State Electricity Company. In the eight months of operation, it generated 4,807MWh of electricity worth $0.3 million. The sale of electricity is, however, frequently interrupted by power blackout in the state electricity supply caused by faulty transmission lines and unstable power voltage. The situation is likely to improve in the second half of 2018 after upgrade and repairs of transmission lines are completed. The third biogas plant in Kalimantan has been completed and is ready for commissioning. The three biogas plants will further reduce the mills’ reliance on fossil fuels and improve the Group’s carbon footprint. With the current shortage of power supply in North Sumatera, the Group is conducting a feasibility study to build its fourth biogas plant in Rantau Prabat which is expected to cost up to $3.8 million. The state electricity company has reacted positively to the proposal to build a biogas plant in North Sumatera.
The Group will start construction of its seventh mill in North Sumatera in 2018. The 60mt/hr mill is expected to cost $19 million and will be substantially funded by internal cash flows. Costs of civil and structural works including earthworks would be higher as the mill is built on shallow peat soil. The site needs to be compacted with mineral soil and 38 meters long concrete piles to support the construction of the mill and storage facilities. The Group has over the past three years explored various sites outside the plantation and along the Barumun river for the construction of a mill, however, it was not able to obtain the necessary permit which allows conversion of agricultural into industrial land.
In 2018, the Group opened up new land and planted 1,563ha of oil palm mainly in Kalimantan, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 2% to 69,793ha (2017: 68,310ha). This excludes the replanting of 470ha of oil palm in North Sumatera. The Group faced difficulties in concluding fair prices with some villagers over land compensation. In some instances, villagers held onto their land and refused to sell especially in South Sumatera and Bangka.
With the current shortage of power supply in North Sumatera, the Group had begun construction of its fourth biogas plant in Rantau Prapat which is expected to cost up to $3.8 million. The earthworks were delayed by poor soil structure at the biogas lagoon which resulted in erosion and sliding of the embankment. Further soil tests were conducted by geotechnical experts to find the appropriate solution.
The Group has started construction of its seventh mill in North Sumatera in 2018. The 60mt/hr mill is expected to cost $19 million and will be substantially funded by internal cash flows. Costs of civil and structural works including earthworks would be higher as the mill is built on shallow peat soil. The level of the site needs to be raised higher by filling and compacting with imported mineral soil. The civil works will require 38 metre long concrete piles to support the buildings and storage facilities. The Group has over the past three years explored various sites outside the plantation and along the Barumun river for the construction of a mill, however, it was not able to obtain the necessary permit which allows conversion of agricultural into industrial land.
Our buyers in Kalimantan rely on barges and tankers to move the CPO purchased. The unavailability of barge or difficult road conditions in remote location often delay the collection of CPO from the mill. In order to ensure that there is no disruption to the mill operation, the Group decided to build an additional storage tank and expand its storage facility in the mill in Kalimantan from 9,000mt to 13,000mt at a cost of $200,000.
In 2019, the Group opened up new land and planted 1,757ha of oil palm mainly in Kalimantan, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 2% to 71,481ha (2018: 69,792ha). The Group continues to face difficulties in concluding fair prices with some villagers over land compensation. Nevertheless the pace of compensation settlement had picked up in Bangka following positive feedback from the former land owners over the progress of plasma development. In 2020, the Group plans to plant 3,100ha of oil palm which includes replanting of 800ha in Alno and CPA.
The construction of the fourth biogas plant in Rantau Prapat costing $3.8 million was beset by delays following the collapse of the embankment of the anaerobic reactor lagoon on two occasions. The lagoon was finally relocated after a geotechnical study suggested a safer and more economical option. The biogas engine of 1.2MW capacity had since been installed with all buildings, electrical and piping works completed. Testing is expected to commerce early next year. The inspection and certification by local authorities may however take up to six months before the plant can upload the electricity onto the national grid.
The earthworks for the seventh mill in North Sumatera costing $19 million was completed after some setbacks due to inclement weather and numerous soil investigations. Due to the nature of the peat soil, concrete piles of up to 52-metre-long are now required to support and house building, storage tanks and critical machineries. It is currently evaluating the bids for civil and structural works including the design of effluents treatment plant for liquid and solid wastes to fully comply with environmental impact assessment. The project is earmarked for completion by 2021.
FFB production in KAP in Kalimantan where 4,887ha had so far been planted is projected to reach 33,000mt by next year and 190,000mt by the year 2030 as planting increases and more palms come of age. FFB are now sent to SGM mill which is about 600km away but during wet season, the FFB are instead sold to local millers. This is because transport time more than doubles as lorries are frequently stuck in mud as untarred public roads are easily damaged by incessant rain and floods. The Group is conducting a feasibility study to build a 45mt/hr mill in KAP to support its operation and to reduce the current high logistic cost.
In 2019 the three mills in MPM, Sumindo and SGM completed their expansion of storage facilities for palm kernels by constructing additional bulking silos at a cost of $800,000 to meet storage needs during peak harvest. A new boiler with a steaming capacity of 40 tph was added to the Sumindo mill at a cost of $800,000.
In 2020, the Group opened up new land and planted 2,190 ha (2019: 1,757 ha) of oil palm mainly in Kalimantan and Bangka, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 3% to 73,600 ha (2019: 71,481 ha). Another 785 ha was replanted in North Sumatera and Bengkulu. In 2021, the Group plans to plant 3,800 ha of oil palm which includes replanting of 950 ha in Bengkulu. Opening of new land for planting can be cumbersome and requires written approval from local authorities, submission of environment impact assessments and meetings with local communities.
As mentioned in the Business Review, the fourth biogas plant in Rantau Prapat costing $3.8 million was commissioned in the fourth quarter of 2020. Unfortunately, it was unable to sell the surplus electricity as the national grid has suspended the uptake following the shutdown of many economic activities during the virus pandemic. An appeal, however, has been made to the ministry in charge of renewable energy. The management is exploring all opportunities to maximise the use of the biogas plant including bottling the BioCNG for Indonesian domestic consumption.
The civil and structural works for the seventh mill in North Sumatera costing $6.7 million has been awarded and mobilization works has started towards the end of the year. The contractor has started to build temporary jetty and housing at the site. Mechanical works estimated to cost another $6 million are expected to be tendered by early next year. The project is earmarked for completion by 2022.
The upgrade of the Bina Pitri mill was finally completed in 2020 improving its milling capacity from 45 mt/hr to 60 mt/hr at a cost of $2.3 million.
Our feasibility study concluded that it is more profitable to build a mill in KAP to support its operation due to high logistic cost. KAP is currently transporting the FFB some 600km to SGM mill or when the transport become too arduous during the monsoon season to sell the fruits locally. The Group plans to build a 45 mt/hr mill with two storage tanks of 5,000 mt each with minimum spare machineries costing an estimated $12 million.
In 2021, the Group opened up new land and planted 1,701 ha (2020: 2,190 ha) of oil palm mainly in Kalimantan and South Sumatera, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 2% to 75,204 ha (2020: 73,600 ha). Another 900 ha was replanted in Bengkulu. In 2022, the Group plans to plant 2,500 ha of oil palm which includes replanting of 1,200 ha in Bengkulu. Opening of new land for planting can be cumbersome and requires written approval from local authorities, submission of environment impact assessments and meetings with local communities.
Old quarters for workers throughout the plantations will be upgraded in 2022. New quarters together with recreation facilities will be added to accommodate more workers and families at the cost of $2.3 million. A further $420,000 will be spent to connect the plantations in Bina Pitri, MPM and SGM to the national electric grids as part of the Group’s effort to reduce carbon emissions. This is expected to reduce fossil fuel consumed by the generators in the remote plantations.
The construction of the seventh mill in HPP, North Sumatera has been delayed by frequent lockdowns caused by the pandemic, affecting the deployment of manpower at the construction site, as well as fabrication of mechanical works, interruption of supply chain and the transport of building materials. During the year, the concrete pilling has completed together with fabrication of loading ramp, clarification tanks and conveyors. Cost of construction has spiralled to about $22 million as the mill located on peat area has to be built according to strict specifications laid out by environmental laws in Indonesia. The conventional anaerobic lagoon constructed from earth is not permitted on peat land due to possible seepage of effluent and contamination of ground water. A purpose-built treatment plant is required to treat the effluent from the mill to a quality specified for discharge to the water course. The effluent plant also includes two 4,000 mt anaerobic digesters and two 1,200 mt aeration tanks. A decanter for solid removal and oil recovery was also added to reduce the number of tanks required which in turn reduce the high cost of concrete piles for its foundation. Steel which constituted a major part of the building and equipment had appreciated by 15% during the construction period. The project is earmarked for completion by the Q3 of 2022.
Our feasibility study concluded that it is more profitable to build a mill in KAP in Kalimantan to support its operation due to high logistic costs. KAP is currently transporting the FFB some 600km to SGM mill or, when this becomes too arduous during the monsoon season, the fruits are sold locally to third parties. The Group plans to build a 45 mt/hr mill with two storage tanks of 4,000 mt each with minimum spare machineries at an estimated cost of $13 million. Due to the hilly terrain and steep ravines, the choice for a mill site is limited. Nevertheless a few possible sites were identified and geological survey and onsite inspections are in progress. Construction is expected to start next year as soon as we receive formal approval from the authorities.
To improve transport of FFB in our plantations, the Group has budgeted to buy more dump trucks costing more than $1 million in 2022 to help deliver our FFB to the mills. This is necessary amidst rising logistic cost as independent transport companies especially in Kalimantan cannot supply adequate trucks to transport our harvest as many trucks are diverted to carry coal which paid better transport rates. In addition, the Group is expected to spend $1.2 million to improve the field roads and connectivity between estates and mills by building new bridges.
The two vertical sterilisers/pressure vessels in Bina Pitri mill are 12 years old and are scheduled to be replaced, for safety reasons, at a cost of $370,000 in 2022.
The fabrication and installation of an additional 45,000 kg/hour steam boiler in SGM mill costing $980,000 is expected to be completed in 2022 after a long delay caused by the pandemic. A second boiler is required to back-up the mill operation and to avoid any disruption as it entered its sixth year of operation. The mill is projected to process up to 380,000 mt of FFB in 2022.
Upgrading works at SGM and Sumindo mills which started some years back involving the addition of boilers, steam turbines, screw press, digester, CPO and kernel storages, clarification station, water and effluent treatment plants and sterilizer at a combined cost of $4.5 million are expected to be completed this year increasing their milling capacity to 60 mt/hr from 45 mt/hr.
The Group plans to install an oil recovery system for its MPM mill at a cost of $1 million. This system extracts oil from its raw effluent besides reducing the solid content of the effluent. The system when fully operational is reportedly able to improve the OER by 0.2% to 0.3%. As the mill process up to 420,000 mt of FFB annually, it could potentially recover up to 1,000 mt of CPO per year. Reducing the solids in the raw effluent will result in less silting in the ponds after extraction of biogas in the anaerobic lagoon.
In 2022, the Group opened up new land and planted 952 ha (2021: 1,701 ha) of oil palm mainly in Kalimantan and South Sumatera, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 1% to 76,095 ha (2021: 75,204 ha). Another 1,100 ha was replanted in Bengkulu and North Sumatera. In 2023, the Group plans to plant 2,500 ha of oil palm which includes replanting of 1,400 ha in North Sumatera and Bengkulu. Opening of new land for planting can be cumbersome and requires written approval from local authorities, submission of environment impact assessments and meetings with local communities. All new plantings are carried out following the HCSA guidelines and are verified by accredited consultants.
Old quarters for workers throughout the plantations were progressively modernised in 2022 at a cost of $143,000. Another $1.7 million is budgeted for 2023 for renovations and refurbishments to provide better comfort for workers. The management has also initiated talks with the relevant authorities to speed up electrification of two remote locations in Bengkulu and Kalimantan where our plantations are located. The number of users in these locations may, however, be small and may not justify the high cost of laying transmission lines. As an alternative solution, the management is looking at the cost of installing solar panels to provide electricity during the day when the generator sets are off to ensure continuous electricity supply and to ensure comfort of our employees and families. Some $300,000 has been set aside for this purpose.
The construction of the seventh mill in HPP, North Sumatera has been delayed by frequent lockdowns caused by the pandemic, affecting the deployment of manpower at the construction site, as well as fabrication of equipment. Unusual heavy rain in fourth quarter caused flooding and soft soil condition delaying mobilization of heavy machineries for the construction of effluent treatment tanks. Construction work in exposed areas were stopped frequently to ensure safety of workers during the periods of heavy rainfall. Cost of construction has spiralled to about $23 million [RN1]as the mill, located on peat area has to be built according to strict specifications laid out by environmental laws in Indonesia. The conventional anaerobic lagoon constructed from earth is not permitted on peat land due to possible seepage of effluent and contamination of ground water. A purpose-built treatment plant is required to treat the effluent from the mill to a quality specified for discharge to the water course 7.5km away. The effluent plant also includes two 4,000 mt anaerobic digesters and two 1,200 mt aeration tanks. A decanter for solid removal and oil recovery was also added to reduce the number of tanks required which in turn reduced the high cost of concrete piles for its foundation. Steel, cement, transport and equipment costs have increased substantially driving up the project costs. The project is earmarked for completion by the first half of 2023.
Our feasibility study concluded that it is more profitable to build a mill in KAP in Kalimantan to support its operation due to high logistic costs. KAP is currently transporting the FFB some 600km to SGM mill or, when this becomes too arduous during the monsoon season, the fruits are sold locally to third parties. The Group plans to build a 45 mt/hr mill with two storage tanks of 4,000 mt each with minimum spare machineries at an estimated cost of $13 million. Due to the hilly terrain and steep ravines, the choice for a mill site is limited. After careful consideration, a potential site had been selected. The soil investigation was completed and the Environmental Impact Assessment (“EIA”) is now in progress which is likely to be completed in the second quarter of 2023. The earthworks will commence after EIA approval.
To improve transport of FFB in our plantations and help deliver the FFB to the mills, the Group purchased 54 units of dump trucks costing $1,816,000 in 2022. In 2023 we have budgeted another $741,000. This is necessary amidst rising logistic cost as independent transport companies especially in Kalimantan cannot supply adequate trucks to transport our harvest as many trucks are diverted to carry coal which pay better transport rates. In addition, the Group spent $699,000 to improve the field roads and connectivity between estates and mills by building new bridges. The Group has budgeted to spend a further $4.7 million in 2023 to improve and maintain our roads for better connectivity.
Two old and worn-out vertical sterilisers/pressure vessels in Bina Pitri mill are in stages of replacement from the third quarter of 2022 and will be completed in the first half of 2023 at a cost of $370,000. An additional two more units are scheduled for replacement before the end of next year for the same cost. A similar undertaking will also be conducted in Sumindo mill costing $280,000 to replace the thinning of sterilizers shell. An additional bulking silo for storing kernel with a capacity of 400 mt will be built at the Bina mill at a cost of $140,000.
The fabrication and installation of an additional 45,000 kg/hour steam boiler in the SGM mill costing $980,000 was completed in the third quarter of 2022. This second boiler is required to back-up the mill operation to avoid any disruption as the mill enters its seventh year of operation. The mill is projected to process up to 400,000 mt of FFB in 2023. Two additional units of vertical sterilizers, complete with FFB feeding and discharge conveyors, will be constructed in 2023 at an estimated cost of $650,000 to cope with the increase throughput of crops. An additional oil storage tank with a capacity of 4,000 mt estimated at $275,000 will be added to the present four units to increase SGM storage capacity to 13,000 mt to avoid over capacity in instances of delays in the collection by tanker ships.
The export ban of CPO early this year has resulted in the costly reduction of external crop purchases in Tasik mill as it had to prioritise internal crop processing due to limited storage facilities of 5,000 mt. Consequently, the Group has allocated $275,000 to expand its storage facilities in Tasik mill in 2023.
The construction of the oil recovery system in MPM mill at a cost of $1 million will be completed in the second quarter of 2023 after some delay in delivery of imported equipment. This system extracts residual oil from raw effluent as well as reducing fine solid contents in the effluent. The system, when fully operational, is reportedly to be able to improve the OER by 0.2% to 0.3%. As the mill processes up to 400,000 mt of FFB annually, it could potentially recover up to 800 mt of CPO per year. The reduction of solids in the raw effluent will result in less silting in the effluent treatment ponds after extraction of biogas in the anaerobic lagoon.
In 2023, the Group opened up new land and planted 775 ha (2022: 952 ha) of oil palm mainly in Kalimantan and Bangka. With the disposal of the South Sumatera plantations, planted area including the smallholder cooperative scheme, known as Plasma, reduced by 9% to 68,948 ha (2022: 76,095 ha). Another 1,301 ha was replanted in North Sumatera and Bengkulu. In 2024, the Group plans to plant 3,000 ha of oil palm which includes replanting of 2,120 ha in North Sumatera and Bengkulu. Opening of new land for planting can be cumbersome and requires written approval from local authorities, submission of environment impact assessments and meetings with local communities. All new plantings are carried out following the High Carbon Stock Approach (“HCSA”) guidelines and are verified by accredited consultants.
Throughout the plantations, old quarters for workers were progressively modernised in 2023 at a cost of $2.3 million. Another $3.1 million is budgeted for 2024 for renovations and refurbishments to provide better comfort for workers. Following our discussion with the relevant authorities to speed up electrification of remote locations, where our plantations are located, the Group spent $156,400 to connect 288 houses with electricity. In 2024, $1.5 million is allocated to provide electricity to more than a thousand homes.
The construction of the seventh mill in HPP, North Sumatera was finally completed in the fourth quarter of 2023 at a cost of $22.5 million following a lengthy delay caused by the unfortunate explosion of one of the anaerobic tanks during construction which resulted in work having to be suspended, pending the completion of an investigation and clearance from the authorities before work can be resumed. The contractor has compensated the families of the deceased and the families have waived any future claim against AEP. The mill has started processing small batches of in-house crops to test various equipment. The start-up of the effluent treatment plant requires controlled feeding of small amount of palm oil mill effluent (“POME”) to cultivate the anaerobic bacteria in the anaerobic tank digesters. When the effluent treatment plant is fully operational, the mill will go into full production including intake of external FFBs. The effluent treatment in HPP is unique compared to the other mills as lagoons to hold the effluents are not permitted in HPP due to the risks of contamination by seepage of effluents into ground water. Effluents are therefore stored in tanks which need better treatment and control due to limited storage capacity.
The Environmental Impact Assessment (“EIA”) for the proposed new mill in KAP in Kalimantan has been completed and submitted to the Ministry for Environment and Forestry for approval. The process for approval can be tedious and likely to take some time due to strict new regulations issued by the Indonesian government. We are following up with the relevant authorities and making every effort to speed up the approval so that earthworks can begin. The earthworks will be substantial and costly involving levelling terrain to create flat areas for the site. The KAP estate is located in a very hilly area with deep ravines and the choice of sites for the mill is limited. The mill, with a planned capacity of 45 mt/hr will be sufficient to process all the crops from KAP plantation. The mill is projected to start in the first half of 2024 at a cost $15.3 million.
During the year, the Group purchased 23 units of dump trucks costing $713,000 to improve transportation and delivery of FFB in our plantations as well as to the mills. An additional sum of $377,000 has been allocated in 2024 for the same purpose. This is necessary amidst rising logistic cost as independent transport companies especially in Kalimantan and Bengkulu cannot supply adequate trucks to transport our harvest as many trucks especially in Kalimantan are diverted to carry coal which pay better transport rates. In addition, the Group spent $1.2 million to improve the field roads and connectivity between estates and mills by building new bridges. The Group has budgeted to spend a further $3.1 million in 2024 to improve and maintain our roads for better connectivity.
In Bina Pitri mill, three old and worn-out vertical sterilisers/pressure vessels have been replaced with better designed units requiring new foundations. The fourth unit in Bina Pitri mill is being replaced in the second quarter of 2024. The total cost of replacement will be in the region of $600,000. In Sumindo mill, four units of old sterilizers were completely replaced at a cost of $510,000.
In 2023, SGM mill processed in excess of 450,000 mt of FFB. Additional features were added to ensure the smooth running of the milling process without disruption. The sterilizer station will be extended with two additional units of vertical sterilizers complete with FFB feeding and discharge conveyors at a cost of $750,000 on top of four existing units. The project is expected to be completed by the second quarter of 2024. An additional oil storage tank with a capacity of 4,000 mt was added at a cost of $275,000 in addition to the present four units to increase storage capacity to 17,000 mt. This is to ensure that SGM has sufficient storage in the event of delays in the collection by tanker ships caused by bad weather.
At Tasik mill, the railway tracks and the marshalling system for the cages were upgraded at a cost of $200,000. In the coming year, Tasik mill will install a new boiler with superheaters of 45,000 kg/hr at an estimate cost of $1.2 million.
The corroded roofings and structures to both factory buildings in MPM and Bina Pitri mills were replaced for $370,000. MPM mill also spent reconstruction cost of $150,000 to fix a hill slope next to the mill, damaged by landslide during heavy rainfall in 2023. One unit of horizontal sterilizer was replaced at MPM mill costing $145,000 while another boiler is currently being refurbished and upgraded by adding superheaters to enhance its performance at a cost of $350,000, to be completed by the second quarter of 2024.
The oil recovery system installed at MPM mill is having some problems and is only partially operating. While the decanter is operating well to remove some of the solids in the sludge, the membrane system chokes frequently during operation. The contractor will introduce a high-speed separator to improve the performance.
Two of our mills namely SGM and HPP, which use river barges to transport their CPO, are required by the government authorities to build their own jetties. The mills currently use government owned jetties and the Group can only use them on a temporary basis as they are meant for public use. Jetties are used to connect the shore and deep water for the purpose of docking of river barge to facilitate loading of CPO. The Group is targeting to acquire suitable land next to the rivers to construct two jetties in 2024 which is expected to cost $1.7 million.
Areas
At 31 December 2023 the company operated a planted area of approximately 68,900ha as follows:
Crops Production/Sales – 2023
For further details:
Historic data – click here
Charts – click here (.pdf)
All group mills process significant quantities of crop bought-in from outside growers.
