Monday, March 19, 2012

Olam to invest US$183m to develop rubber plantations in Gabon

SINGAPORE: Olam International plans to invest about US$183 million to develop 28,000 hectares of rubber plantations in Gabon, Africa.

The company said in a statement that it will partner with the government of the Republic of Gabon.
Olam will hold 80 per cent in a joint venture company with Gabon holding the remaining 20 per cent.
Planting is set to start by 2013 and be completed by 2019 with Olam targeting an average yield of between two and 2.2 tonnes per hectare.

The investment includes setting up a processing unit with a capacity to process 225 tonnes per day of rubber cup lumps. At full maturity, the project will generate annual volumes of approximately 62,000 tonnes of dry rubber.

Olam said the rubber products will be exported to the tyre and general rubber goods industries worldwide.
Olam's senior vice president and head of rubber, Ashish Govil, said: "The largest part of the profit pool in the rubber value chain (about 75 per cent) is domiciled in upstream plantations."

Olam's equity investment is expected to be US$59 million and the debt portion will be project-financed.
Olam said the project is expected to achieve an earnings before interest, taxes, depreciation and amortisation (EBITDA) of about US$155 million to US$160 million at a steady state, an equity internal rate of return (IRR) of 23 per cent, and a steady state return-on-equity (ROE) of 94 per cent.

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