18.15
AEP BORNEO
 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. 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:
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. By June 2007 1,629 ha had been planted and the area is expected to be fully planted by the end of 2008. 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 nature. The estate is located on the west cost of North Sumatra, about 180km from the nearest existing group estate, Tasik. Over the next two years the planted areas will be rehabilitated and the unplanted areas will be planted. Until a mill is built in about four years time, crop will be 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 consist 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 the estimated that of the total land area, 40,000 ha is plantable. It is planned to plant this area over five years, 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" (Ijin 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 hope to plant up to 5,000 hectares in Central Kalimantan. We have set a target to plant up to 10,900 hectares for the group in 2010 and 10,000 hectares per year for the next five years. This means we shall be able to more than double the current area of 45,000 hectares to 100,000 hectares by 2014. In 2010, we acquired PT Kahayan with the initial "Izin Lokasi" area of 17,500 hectares. The new Sumindo mill (45 MT/hour) is expected to be commissioned in the second quarter of 2010. In 2010, Blankahan oil mill's milling capacity shall be increased from the current 25 MT/hour to 40 MT/hour. In 2011, we planted 4,800 hectares of oil palm mainly in Kalimantan, boosting our planted area by 9% to 57,100 hectares (2010: 52,300 hectares). New plantings remain 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 recently introduced timber cutting licenses ("IPK"). In anticipation of the March 2012 Indonesian Sustainable Palm Oil ("ISPO") standards becoming mandatory, the Group has reviewed our planting programme, which at present can be prudently estimated to increase our planted area by 9,000 hectares over the next two years. The tender process for the construction of new palm oil mills in Central Kalimantan and North Sumatra will begin in 3Q2012. The upgrading of Blankahan palm oil mill from rated throughput of 25mt/hr to 40mt/hr was completed at a cost of $1.5 million. In 2012, the Group planted 1,900ha of oil palm mainly in Kalimantan, boosting planted area by 3% to 58,977ha (2011: 57,100ha). New plantings remain 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 now obtained the necessary permit and shall proceed to clear the land for planting. Permits for the construction of palm oil mills in North Sumatera and Central Kalimantan were held up by local authorities in 2012 and the earthworks for one of the mills finally commenced in fourth quarter of 2012. On the progress of the Group's $4.5million investment in the biogas and biomass project for one of the mills in North Sumatera, civil works for the plant commenced in the fourth quarter of 2012 and the whole project is expected to be completed in the third quarter of 2013. This project will enhance the waste management treatment of the mill and at the same time mitigate 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 2013, the Group opened up new land and planted 2,122ha of oil palm mainly in Kalimantan, boosting planted area by 3.6% to 61,099ha (2012: 59,000ha). This excludes the replanting of 400ha of oil palm in North Sumatera. New plantings remain behind schedule due to protracted negotiations over settlement of land compensation with villagers in Bengkulu and Bangka with delay in the issuance of land release permit (Izin Pelepasan) in Kalimantan. However, the plantation has since obtained the necessary permit and shall proceed to negotiate with villagers for compensation of land before clearing for planting. The earthworks for construction of the mill in Central Kalimantan were disrupted by heavy rainfall in the second quarter of 2013. The earthworks are now almost completed and construction of mill buildings is now in progress. This mill with an initial capacity of 45 mt/hr is expected to be operational in second quarter of 2015. As previously reported the construction of another mill in North Sumatera is deferred while the board considers further the relative cost advantages of two selected sites. The $5 million biogas and biomass project for one of the mills in North Sumatera is nearing completion with the installation of equipment and commissioning expected in the second quarter of 2014. Redesign of some equipment as well as inclement weather delayed the external works and implementation. When the plant is fully operational, it will result in a significant reduction in greenhouse gas emission which is presently discharged while undergoing effluent treatment in the anaerobic lagoons. The biogas reactor tank and covered lagoons will trap biogas which will be used to generate power in place of fossil fuel. The biomass plant will utilize this power to process the empty fruit bunches into dried long fibres for export. |
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