Environmental Lobby Examines Samsung's $1.63 Billion Indonesian Biodiesel Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Palm oil has traditionally been used as a constituent in commercial food products and domestic cooking, with 70% of production used in food products. Palm oil is now moving into focus as a favored source for biodiesel production, becoming a player in the ongoing debate on the use of crops and land as a fuel source.

In Indonesia it is reported that 4.4 million acres of rainforest are consumed for logging and crop projects every year, and the Indonesian Palm Oil Association states that, in the future, member companies will only plant on existing palm oil plantations or use unproductive land that is lying idle.

Against this background, a report in the Jakarta Post saying that the Samsung Group (Seoul, South Korea) is about to launch a 25,000-hectare palm oil plantation biodiesel project in the country's Riau province has put the environmental protection lobby on the alert.

Although the head of Indonesia's National Biofuel Development Team, Al Hilal Hamdi, would not reveal the specific location where Samsung had acquired the land, he said that the company had already spent $163 million on the project and would eventually invest $1.63 billion in developing the land and the biodiesel production plant. The local affiliate of Samsung has so far pleaded ignorance about the project, which is said to have a planned biodiesel output capacity of 50,000 kiloliters per year.

More pressure could be put on the production of biodiesel from palm oil in October, as the Indonesian government plans to issue a new regulation requiring manufacturing companies to use a minimum of 2.5% of biofuels in their fuel consumption. By 2010, the country's biofuel production is forecast to rise to 5 million kiloliters from the current 2 million kiloliters per year. Indonesia's biofuel production comes in two types. Bioethanol is sourced from cassava, sugarcane and sorghum, and biodiesel from castor oil and crude palm oil. For related information, see July 21, 2008, new article - Sime Darby Boosts Palm Oil Refining Capacity in Malaysia and Europe.

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