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Olam invests US$183 million towards rubber plantations in Africa

Posted on : 22 May, 2012

 

Olam International plans to make an investment of US$183 million towards Gabon, Africa, to develop 28,000 hectares of rubber plantations. Olam International said in a statement that the company will partner the government of the Republic of Gabon in a joint venture company with Olam holding 80% and the remaining 20%held by Gabon.

 

Planting is scheduled to begin by 2013 and completed by 2019. The average yield is targeted between 2 and 2.2 tonnes of dry rubber. Olam said that the rubber products are to be exported worldwide to tyre and rubber goods industries. "The largest part of the profit pool in the rubber value chain (about 75 per cent) is domiciled in upstream plantations," said Olam's senior vice president and head of rubber, Ashish Govil.

 

The company also stated that the project is expected to achieve an earnings before interest, taxes, depreciation and amortisation (EBITDA) of about US$155 million to US$160 million at a steady state, an equity internal rate of return (IRR) of 23 per cent, and a steady state return-on-equity (ROE) of 94 per cent.

 

Evidently, there is a growing interest in the industry and prospects in Africa. For that reason, more about the investment opportunities, as well as strategies on operation and management of rubber farms in Africa will be explored in depth at CMT’s first RubberPlant Africa conference to be held in Accra on 04-05 September. The conference agenda is currently being finalized and will be available shortly. Meanwhile, one can contact Ms Hafizah at hafizah@cmtsp.com.sg for queries or Pre-Register to reserve places.

 

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