POSCO International, a South Korean trading company, is collaborating with the oil company GS Caltex to invest US$ 210 million, approximately IDR 3.29 trillion, in the AGPA Refinery Complex (ARC) palm oil processing plant in Balikpapan, East Kalimantan, Indonesia.
Established in 1967, POSCO International Corporation is South Korea’s largest trading company and a subsidiary of POSCO. The company implements overseas development projects such as power generation, railroad, ports, plants, and IT facilities; and invests in energy and mineral development projects globally.
GS Caltex Corporation, established in 1967, is a South Korean Energy and Chemical company jointly owned by Chevron and GS Group. GS Caltex primarily exports petroleum, petrochemical, and lubricant products to 57 countries (as of 2022).
This global partnership will involve POSCO International owning 60% of the joint venture, while GS Caltex will have a 40% stake. The agreement for the palm oil refinery construction was signed by Vice Chairman of POSCO International, Jeong Tak, and GS Caltex CEO, Hur Sae-hong, in Seoul on Thursday, October 12. ARC is set to begin building the palm oil processing plant in the first quarter of 2024.
The plant will be established on a 300,000 m² industrial site in the Balikpapan region. It is expected to produce 500,000 tons of palm oil per year starting in the second quarter of 2025. The products from the facility will be marketed in Indonesia and exported to various countries, including South Korea and China.
POSCO International’s management indicated that this expansion into the palm oil business is part of the company’s commitment to becoming an environmentally friendly global company. Meanwhile, GS Caltex will utilize the plant to produce biofuel as part of its Green Transformation vision.
Both companies are also considering constructing additional joint ventures for sustainable aviation fuel or sustainable marine fuel, using waste oil generated from the ARC palm oil refinery.
“Amid the growing global population and increased demand for biochemical materials, the palm oil business holds great promise,” said an official from POSCO International.
In addition to palm oil production, POSCO International is involved in distillation, allowing the company to expand its value chain into various new business sectors, such as bioenergy, food, and oils.
GS Caltex CEO, Hur Sae-hong, stated that the joint venture would enable them to enhance their competitiveness in the global market.
