Integrated Value Chain | KENCANA AGRI
Kencana's integrated value chain comprises plantations, palm oil mills, kernel crushing plants, bulking facilities and logistics services, as well as a renewable biomass power plant to support and complement our plantation operations.
Oil Palm Plantations
With a total land bank of 188,784 hectares and total planted area of 43,340 hectares (including Plasma plantations) as at 30 September 2010, our Group has a significant cultivatable land bank with considerable planting potential. Our oil palm plantations are strategically located in the Sumatera, Kalimantan and Sulawesi regions of Indonesia where the climate is well-suited for oil palm plantation. All our current plantations were successfully cultivated from greenfield land.
As at 30 September 2010, our total planted area is 43,340 hectares (including Plasma), of which approximately 60% are mature and approximately 40% are immature. As these young oil palms mature, our FFB harvests will increase, thereby improving the utlisation rates of our palm oil mills and lowering our productions costs. The average CPO extraction rates, along with our profitability, will also improve.
Our Group has three palm oil mills and two kernel crushing plants. Our palm oil mills have a total production capacity of 165 MT/hour, and our kernel crushing plants have a combined production capacity of 435 MT/day.
Our main products are CPO and CPKO, which are derived from the fresh fruit bunches harvested from our plantations or purchased from third parties (including our plantations under the Plasma Programme). We produce CPO and CPKO at our palm oil mills and kernel crushing plants respectively. Palm kernel cake (“PKC”) is a by-product of the CPKO production process and may be sold to third parties or utilised as biomass.
Bulking and Logistics Operations
We operate a bulking terminal in Belinyu, Bangka island comprising three storage tanks with a total capacity of 19,500 MT and we are able to utilise vessels at a nearby jetty to deliver our products. In addition, we own and operate three barges which we use primarily to transport our own products. Having our own bulking facilities and transportation barges enable us to exercise better control over our logistics management and to meet customers' delivery requirements at short notice.
In May 2009, Kencana formed a joint venture with Louis Dreyfus Commodities to develop and operate a deep-water port (accessible to vessels up to 70,000 MT) and bulking terminal in Balikpapan, East Kalimantan to source and trade CPO and other products.
In line with our zero waste strategy, our Group embarked on a renewable energy project (renewable biomass power generation) using the waste from empty fruit bunches (“EFB”) and excess kernel shells to produce green electricity. Being the first commercialised renewable biomass project in Indonesia, this project also ties in with our corporate social responsibility programme to contribute to the local community.
Construction of our first renewable biomass project began on Bangka Island. This renewable biomass plant is adjacent to our palm oil mill and has a capacity of 6.0 MW. It is currently operating on a trial basis and supplying electricity to PLN following a one year renewable contract we entered into in May 2007. In addition to using our own EFB and palm kernel shells as biomass fuel, we also purchase from third parties if there is insufficient supply.
Following the success of the Bangka project, the local authorities in Belitung island (which is next to Bangka island) together with PLN requested that our Group set up a similar project in Belitung island. The plant in Belitung has a capacity of 7.5 MW and was completed in 2009. We may add a second 7.5 MW power train to the plant should there be insufficient sources of biomass.