Posco International has completed the full value chain of its palm oil business by acquiring a 65.72 percent stake in Indonesian plantation firm Sampoerna Agro for $566 million. The total investment is expected to reach $862 million due to a mandatory tender offer for minority shares. The deal adds 128,000 hectares to its operations, bringing the total global agricultural base to 150,000 hectares.
Posco International, the trading and energy arm of Posco Group, announced on November 20 that its Singapore-based subsidiary acquired a 65.72 percent stake in Jakarta-listed Sampoerna Agro for $566 million. Due to Indonesia's financial regulations requiring a tender offer for minority shares, the total investment is projected to reach up to $862 million. The acquisition is described as a strategic move to strengthen the company's global palm oil value chain.
Sampoerna Agro operates palm plantations across Sumatra and Kalimantan islands in Indonesia and owns a major seed production subsidiary and an agriculture research institute. The deal adds 128,000 hectares to Posco International's Indonesian agro portfolio, bringing the total to 150,000 hectares. The company entered the palm oil business in 2011, developing plantations in Indonesia's Papua province, and began commercial production in 2016. It currently operates three crude palm oil mills producing a combined 210,000 tons annually.
A Posco International official stated, "With this acquisition, Posco International has added 128,000 hectares to its existing Papua plantations, bringing its total global agricultural base to 150,000 hectares." The official added that the existing plantations have posted an average operating margin of 36 percent, contributing strongly to Posco Group's profitability, and the new plantations are already in full production for immediate stable profits.
On the previous day, Posco International and GS Caltex held a ceremony marking the completion of their joint venture's palm oil refinery in Indonesia. Established in 2023 with a $210 million investment, construction began in May last year. The facility has an annual refining capacity of 500,000 tons, equivalent to about 80 percent of Korea's yearly refined palm oil imports. Trial operations will start soon, with commercial production by year-end.
Posco International plans to supply crude palm oil from its plantations to the refinery, which will produce refined oil for sale in Korea, Indonesia, and China. GS Caltex will leverage its refining expertise to enhance efficiency and supply refined palm oil for biodiesel in the Korean market. The official noted, "By strengthening our leadership in the global palm oil sector, Posco Group aims to help Korea reduce its reliance on imported edible oils and contribute to national food security." This expansion aligns with Posco Group Chairman Chang In-hwa's strategy for sustainable, future-oriented businesses to ensure long-term growth.
(Note: Yonhap reports the deal worth 1.3 trillion won ($884.7 million), showing a slight discrepancy in total amount.)