Indonesia's Sinar Mas Group has signed a deal with US energy firm, Fulcrum Power Services, to build a biodiesel plant with an initial capacity of 400,000 tonnes a year, a company official said on May 4.
The plant will be built in Dumai on Indonesia's Sumatra island and should start producing fuel next April, Danny Jozal, the alternative energy chairman at Sinar Mas, said by telephone.
The plant is expected to cost US$60 million (RM205.55 million) and capacity may be raised to one million tonnes from an initial 400,000 tonnes, he added.
The official said one of the diversified group's units, PT Bio Energi Mas, signed the joint venture on May 3 with Houston, Texas-based Fulcrum.
"Sinar Mas has a 50% share in the joint venture company. It will process palm oil, olein, and stearin to biodiesel," Jozal said, adding it may also process Jatropha, a shrub with oil-bearing fruits.
In late March, the company said that it would build a second plant in Malaysia's Lumut.
But Jozal said it was still evaluating the plan.
Sinar Mas Group, controlled by the Widjaja family, has a wide range of businesses, including pulp and paper, property and banking.
The group has joined several Indonesian companies that have announced plans to build biofuel plants, mostly palm-oil based biodiesel, including PT Asian AGri and PT Bakrie Sumatra Plantations, to tap global interest in biofuels.
In January, the group's palm oil unit, PT Smart Tbk, signed an agreement with Chinese oil major, CNOOC, and Hong Kong Energy Ltd for a US$5.5 billion investment to produce biofuel in Indonesia.
The country's vast land resources and cheap labour have also attracted several foreign firms to enter the biofuel industry, including Golden Hope Plantations, Genting Bhd, Sime Darby Bhd and Wilmar Holding Pte Ltd.
Indonesia is the world's second largest producer and exporter of palm oil after Malaysia.
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