Singapore’s Golden Agri-Resources, a holding of the embattled Sinar Mas Group, said it will form a partnership with the government of Liberia to establish a 220,000-hectare plantation in the West African nation, reports the Jakarta Globe.
The 25-year $1.6 billion joint venture will establish oil palm estates in southeastern Liberia. Golden VerOleum, a subsidiary of Golden Agri-Resources, is leading the project, which is seeking additional outside investors.
The announcement comes as Golden Agri-Resources faces mounting criticism from green groups over its environmental performance in Indonesia. Last week Burger King announced it would sever ties with PT Smart, a subsidiary of Golden Agri-Resources, after an audit showed the firm had cleared tropical rainforest and peatlands in Borneo and Sumatra in violation of Indonesian law and the company’s own standards. PT Smart has already lost General Mills, Unilever, Kraft and Nestle as customers and is under pressure from other major buyers, including Cargill, to improve its operations.
Sinar Mas Group is also facing the prospect of limited future expansion under Indonesia’s proposed moratorium on peatland and natural forest conversion. The moratorium is part of the government’s partnership with Norway to reduce greenhouse gas emissions from deforestation and degradation. The moratorium is set to take effect in 2011.
Indonesian and Malaysian growers are now looking for opportunities to expand abroad. Africa, where the species of oil palm grown in Indonesia and Malaysia originated, is a particularly attractive target.
Liberia lacks a commercial palm oil industry. Most of its annual production—presently around 6,000 metric tons according to the USDA—goes toward domestic consumption. Golden Agri-Resources is betting its improved genetic stock and efficient cultivation techniques can substantially boost the productivity of Liberian plantations. Last year Sime Darby, a Malaysian palm oil producer, said it would invest $640 million in Liberia’s palm oil sector.
Liberia is recovering from from a brutal civil war which ran from 1989-2003. Its economy surged 9.4 percent in 2008, after climbing 7.8 percent in 2007, 9.8 percent in 2006, and 21.8 percent in 2005.
Oil palm is the world’s highest yielding commercial oilseed. Palm oil is used in food products, for industrial purposes, and in biodiesel.