MP Evans Group PLC (AIM:MPE) said its Kota Bangun palm oil project in East Kalimantan could expand by more than 3,000 planted hectares after a US$2 million acquisition and the securing of rights over neighbouring land.
The group acquired plantation company PT Kalimantan Wahana Berjaya, which owns 776 hectares already planted with oil palm and up to another 450 hectares considered suitable for planting. Existing palms will require some rehabilitation or replanting.
At the same time, subsidiary PT Nusantara Agro Sentosa secured initial land rights over the adjoining 3,600-hectare Long Nah area. Survey work indicates around 2,000 hectares can be developed for oil palm under the group's environmental guidelines.
The company expects to invest US$20 million to US$25 million rehabilitating, planting and bringing the new areas to maturity, equating to roughly US$7,000 to US$8,000 per planted hectare.
Chief executive Matthew Coulson said the proximity to Kota Bangun means crops can be processed through existing mills, providing “a further source of long-term production growth” while improving use of milling capacity.
He told investors: "This new hectarage, close to our existing Kota Bangun project in East Kalimantan, provides a further source of long-term production growth.
"Its location means that crop from the new areas can be processed through the group's existing mills, supporting our strategy of processing more of our own crop and making efficient use of our milling capacity," he commented.
