Saturday March 19, 2005 - LION Forest Industries Bhd has entered into ajoint venture with Pemerintah Kabupaten Malinau (PKM) to develop 40,000haof oil palm plantation and build two crude palm oil mills in MalinauRegency, Kalimantan Timur.
The joint-venture company, PT Lion Intimung Malinau (PT Lima), would havea paid-up capital of US$5mil, Lion Forest told Bursa Malaysia yesterday.
Lion Forest, which will hold a 95% interest in PT Lima, will inject cashof up to US$5mil in the company while PKM will contribute the land.
The annual fresh fruit produce for the plantation, when fully cultivated,is expected to be up to 720,000 tonnes per month. The kernel production isexpected to be up to 36,000 tonnes a year while the crude palm oilproduction is expected to be up to 144,000 tonnes per year.
PT Lima will be issued the hak guna usaha for the land for 35 yearsinitially, with an option to renew that for a further 25 years.
The proposed joint venture will enable Lion Forest to tap into the oilpalm industry and diversify its earnings. It is not expected to have amaterial impact on the earnings of the Lion Forest group for its financialyear ending June 30, 2005.
The capital requirements for the plantation and CPO mills will be financedwith bank borrowings and internal funds.
The Lion Forest group will be able to benefit from this project with itsexperience in the plantation industry via unit Sabah Forest Industries SdnBhd, and knowledge of the operating environment in the Malinau regency.