Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
POSCO International to invest $862 mil. in Indonesian palm oil business
POSCO International CEO Lee Kye-in, seventh from left, and GS Caltex CEO Hur Sae-hong, sixth from left, pose with participants at the completion ceremony of their joint venture's palm oil refinery in East Kalimantan, Indonesia, Wednesday. Courtesy of POSCO International
By Park Jae-hyuk
GS Caltex to help supplying biofuel in Korean market
POSCO International completed the full value chain of its palm oil business through the acquisition of an Indonesian plantation company and the completion of a palm oil refinery in the Southeast Asian nation.
The trading and energy arm of POSCO Group said Thursday that its Singapore-based subsidiary acquired a 65.72 percent stake in Sampoerna Agro for $566 million.
The total investment is expected to reach up to $862 million, given Indonesia’s financial regulations requiring POSCO International to make a tender offer for the remaining shares held by minority investors.
“With this acquisition, POSCO International has added 128,000 hectares to its existing Papua plantations, bringing its total global agricultural base to 150,000 hectares,” a POSCO International official said.
POSCO International began developing palm oil plantations in Indonesia’s province of Papua in 2011 and started commercial production in 2016. It now operates three crude palm oil mills that produce a combined 210,000 tons annually.
Because the newly acquired plantations are already in full production, the company expects to generate stable profits immediately.
“Our existing plantations have posted an average operating margin of 36 percent, making a strong contribution to POSCO Group’s profitability,” the official added.
Workers spread fertilizer at Sampoerna Agro's palm oil plantation in Indonesia in this undated photo. Courtesy of POSCO International
On Wednesday, POSCO International and GS Caltex held a ceremony marking the completion of their joint venture’s palm oil refinery in Indonesia. Trial operations will begin soon, with commercial production scheduled to start by year-end.
The trading firm and the oil refiner established the joint venture in 2023, investing $210 million to construct the refinery, which began in May last year. The facility has an annual refining capacity of 500,000 tons — about 80 percent of Korea’s yearly refined palm oil imports.
POSCO International plans to supply crude palm oil from its plantations to the refinery, which will produce refined oil for sale in Korea, Indonesia and China. GS Caltex will use its refining expertise to boost operational efficiency and supply refined palm oil for biodiesel in the Korean market.
“By strengthening our leadership in the global palm oil sector, POSCO Group aims to help Korea reduce its reliance on imported edible oils and contribute to national food security,” the official said.
The company added that expanding its palm oil operations aligns with POSCO Group Chairman Chang In-hwa’s strategy to pursue sustainable and future-oriented business opportunities for stable long-term growth.