KUALA LUMPUR (Nov 8): Sime Darby Plantation Bhd’s downstream arm Sime Darby Oils (SDO) is investing over US$150 million (RM711.18 million) for the construction of a new specialty oils and fats refinery in Sumatera.

In a statement on Tuesday (Nov 7), the company said the refinery will be located at the Sei Mangkei Special Economic Zone in North Sumatera’s Simalungun region with a built-up area of 16ha.

The refinery is expected to begin production in 2024.

Upon completion, it will contribute an annual production capacity of more than 450,000 tonnes of palm and lauric based products.

According to SDO’s managing director Mohd Haris Mohd Arshad, the company’s latest investment reflects SDO’s long-term commitment to Indonesia and to contributing to the development of the North Sumatera region.

“The Sei Mangkei refinery is Sime Darby Oils’ biggest investment in Indonesia to date and will be our second refinery investment in this country after our Pulau Laut refinery in Kalimantan.

“It shall employ world-class technologies to produce our specialty oils and fats as well as more value-added products for export markets,” said Mohd Haris.

SDO’s latest refinery is the company’s fourth downstream asset in Indonesia.

It operates a refinery in Pulau Laut, which began operations in 2014, and two kernel crushing plants in Rantau, South Kalimantan and in Pemantang, Central Kalimantan.

The Sei Mangkei refinery, SDO’s first facility in the Sumatera region, is expected to leverage existing crude palm oil production within the region through Minamas Plantation, Sime Darby Plantation’s Indonesian subsidiary.

Mohd Haris said Sei Mangkei is a strategic location due to its good inbound and outbound access as well as proximity to both bulk and containerised ports.

The region is also among the special economic zones established by the Indonesian government that are implementing green growth principles to attract more green investment opportunities into the country.

“Hence, the decision by SDO to build its new refinery in the region aligns with SDO’s own target to contribute towards the Sustainable Development Goals, particularly Goal 12 of ensuring sustainable consumption and production patterns,” he said.

At 11.05am, Sime Darby Plantation shed 0.92% or four sen to RM4.32 with 320,600 shares traded.