Petaling Jaya, 8 November 2022 –Sime Darby Oils (SDO) announced the construction of its new specialty oils and fats refinery in the Sei Mangkei Special Economic Zone in North Sumatera’s Simalungun Region. The refinery will be built on a 16-hectare site, with an annual production capacity of more than 450,000 MT of palm and lauric based products.

SDO, the downstream arm of Sime Darby Plantation Berhad (SDP) is investing over USD150 million in the refinery, which is expected to begin production in 2024. At full capacity, the refining operations will create more than 200 jobs locally and other positive spillover effects.

On 2 November 2022, a groundbreaking ceremony in Simalungun, North Sumatera, to mark the construction of the new refinery was attended by the Regent of Simalungun’s representative – Zonny Waldi, Chairman of Simalungun Parliament - Timbul Jaya Sibarani and other representatives of local stakeholders.

According to Mohd Haris Mohd Arshad, SDO’s Managing Director, the company’s latest investment reflects SDO’s long term commitment to Indonesia and in contributing to the development of the North Sumatera region.

“The Sei Mangkei refinery is Sime Darby Oils’ biggest investment in Indonesia to date and will be our second refinery investment in this country after our Pulau Laut refinery in Kalimantan. It shall employ world-class technologies to produce our specialty oils and fats as well as more value-added products for export markets,” said Mohd Haris.

SDO’s latest refinery is the company’s fourth downstream asset in Indonesia. Besides its premier refinery in Pulau Laut, which began operations in 2014, the company also operates two Kernel Crushing Plants in Rantau, South Kalimantan and in Pemantang, Central Kalimantan. The Sei Mangkei refinery, SDO’s first facility in the Sumatera region, is expected to leverage on existing crude palm oil production within the region through Minamas Plantation, SDP’s Indonesian subsidiary.

“With the complexity of our specialty oils production, coupled with automation and digitisation installed within the refinery, we are opening our doors to Indonesian’s young and upcoming, skilled workforce including engineers, technicians, logistic planners, financial executives, and other high value adding workers, especially in the Northern Sumatera region. Our Sei Mangkei refinery will also offer opportunities for existing and new businesses in the region and we hope to be the catalyst in spurring local and sustainable economic growth,” he added.

The launch of the Sei Mangkei refinery is in line with SDO’s strategic priority to grow its existing downstream business, particularly in the production of sustainable and traceable specialty oils and fats where it is expected to meet demand growth from existing and new customers globally.

SDO’s latest investment in Indonesia, the largest economy in Southeast Asia, will also be supporting the Country’s aspiration to further fortify its downstream sector, whilst fueling further growth in the local region, particularly in industries such as logistics, utilities and services. The investment will also increase SDO’s flexibility to leverage on multiple assets in different geographical locations, globally.

Sei Mangkei is considered a strategic location due to its good inbound and outbound access as well as proximity to both bulk and containerised ports. The region is also among the Special Economic Zones established by the Indonesian government that are implementing green growth principles to attract more green investment opportunities into the country. Hence, the decision by SDO to build its new refinery in the region aligns with SDO’s own target to contribute towards the Sustainable Development Goals, particularly Goal 12 of ensuring sustainable consumption and production patterns.