29/10/2007 (Trading Markets.com), Kuala Lumpur - Astral Asia Berhad (AAB)(KLSE:7054) on Friday said it had teamed up with two Myanmarese firms to develop 170,000 acres of virgin land into oil palm plantations in southern Myanmar.
The entire proposed project estimated to cost US$200 million will be developed over a period of 15-25 years, Astral Asia said in a statement to Bursa Malaysia.
On Oct 26, Astral Asia entered into a Memorandum of Understanding (MOU) with Myanmar Combiz Services Co.,Ltd (MCB) and Green Future Co.,Ltd (GFC).
Astral Asia will have an 85 per cent stake in the joint venture with the balance equally held by the two Burmese partners.
The Division of Peace and Development, Teninthayi Division, has granted Myanmar Combiz Services permission to develop the land into oil palm plantations.
The parties will apply to the Government of Myanmar to grant the subject land a minimum lease of two oil palm cycles (approximately 60 years) for oil palm cultivation.
The statement said the proposed project will be developed in stages and the land lease of 60 years will only commence when it is ready for planting.
Astral Asia said the proposed project in Myanmar will enable the AAB Group to expand its oil palm plantation land bank significantly in line with the group's long term corporate strategy to expand its plantation acreage, hereby providing a considerable profit growth potential for the group.
Based on the information available and subject to due diligence, the cost of production of crude palm oil at the proposed Project is found to be much lower than in West Malaysia, especially the component of land cost, it said.
Upon successful completion of the proposed project, AAB Group's oil palm plantation acreage would have soared from the existing about 14,000 acres (including 4,000 acres under profit sharing management) to 184,000 acres, an increase of 1,300 per cent.
"The current sustainable high prices of crude palm oil and palm kernel further confirm the viability of the oil palm plantation business," it said.