Sime Darby Explores Potential Investment in Vegetable Oil Plant in France

The potential investment in the Port-la-Nouvelle plant forms part of Sime Darby Plantation’s plan to become an integrated player in the palm oil industry.

3/8/2011 --- Sime Darby Plantation has identified the Languedoc- Roussillon region in France as a potential location to establish its multi-feedstock vegetable oil processing plant as part of a strategy to expand into key areas around the world.

The proposed plant, to be located in the coastal town of Port-la-Nouvelle, will help to meet the growing demand for edible oils in Southern Europe and North Africa. The choice of Languedoc-Roussillon itself is strategic; the region, with a population of 2.4 million, has a vibrant agri-food industry. It has a significant number of growers of cereal crops such as sunflower who will benefit directly from the establishment of the processing plant.

The potential investment in the Port-la-Nouvelle plant forms part of Sime Darby Plantation’s plan to become an integrated player in the palm oil industry, according to Sime Darby Bhd President and Group Chief Executive Dato’ Mohd Bakke Salleh. “It will capitalize on the strategic location of our upstream operations even as it complements our refinery operations in Netherlands” Mohd Bakke added.

Sime Darby Plantation is the plantation and agri-business subsidiary of Sime Darby Bhd, the world’s largest listed producer of palm oil. More than one-third of Sime Darby Plantation’s production is certified sustainable palm oil (CSPO) under guidelines established by the Roundtable on Sustainable Palm Oil (RSPO). The company aims to have all its production from Malaysia and Indonesia certified by the RSPO by the end of 2011.

Palm-based feedstock for the plant in Port-la-Nouvelle will eventually be sourced primarily from Sime Darby Plantation’s operations in Liberia. In the shorter term, CSPO will be obtained from Sime Darby Plantation’s other internal sources while other vegetable oils will be sourced externally, potentially from farmers in the region.

The Group now has a refinery in Zwijndrecht, Netherlands, owned by its European subsidiary Sime Darby Unimills BV. The refinery sources CSPO from the Group’s estates in Sabah, Malaysia, and other feedstock from external sources.

This proposed investment in the Languedoc-Roussillon Region will pave the way for Sime Darby Plantation to tap into an area of potential growth in Europe and North Africa while presenting an unprecedented opportunity for economic development and new employment.

“While we continue to assess other potential locations in Europe as well as other parts of the world, the Port-la-Nouvelle location has the added advantage of local feedstock supply as well as its proximity to Sime Darby Plantation’s operations in Liberia,” Mohd Bakke said. He noted that Sime Darby Plantation has had fruitful discussions with the port and regional authorities and they are very supportive of its proposed investment in the plant.

The proposed plant can be up and running by the end of 2013 subject to the favourable outcome of feasibility studies and due diligence exercises and the approval of the Sime Darby Board of Directors.

The President of the Regional Council, Christian Bourquin, and his first Vice-President, the Senator Robert Navarro, are pleased that Sime Darby Plantation had chosen to invest in France despite the strong competition in Europe. “This is good news to have international groups come to France and presents an excellent opportunity for the economy and employment in the region. This is a reward for all the efforts we have put in over the years to enhance the food sector in the Languedoc-Roussillon region,” he added. “We are pleased to welcome Sime Darby Plantation, a company that has already proven its commitment in sustainable practices.”

The Languedoc-Roussillon region, located in the South of France and sometimes referred to as the country’s Sun Belt, is the world’s largest wine-producing region. The region’s unemployment rate at more than 12% is higher than the French national average of over 9%.

Sime Darby Plantation has 63 strategic operating units (SOUs*) of which 23 are producing CSPO. Of the remaining 40 SOUs, 30 have been audited by independent certification bodies and are awaiting certification by the RSPO. Sime Darby Plantation and Sime Darby Unimills play a leading role in the development and promotion of sustainable practices in the palm oil sector.