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Gabon : Olam plans for US$183million investment to develop rubber plantations in Gabon
Publish Date : 21-Mar-2012
Olam International has announced plans to invest over US$183 million to construct 28,000 hectares of rubber plantations in Gabon, Africa. To facilitate this development, it will partner with the government of the Republic of Gabon.
In a joint venture company, Olam is to hold 80 per cent and Gabon will hold the remaining 20 per cent.
Planting is scheduled to start by 2013 and would be completed by 2019. Equity investment of Olam would be US$59 million and the debt portion will be project-financed.
A processing unit having a processing capacity of 225 tonnes per day of rubber cup lumps will be set up. The project is expected to produce annual volumes of around 62,000 tonnes of dry rubber at full maturity.
According to Olam, the rubber products will be exported to the tyre and general rubber goods industries across the world. The project is expected to attain an earnings before interest, taxes, depreciation and amortisation (EBITDA) of around 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.
Senior vice president and head of rubber at Olam, Ashish Govil, said, “The largest part of the profit pool in the rubber value chain (about 75 per cent) is domiciled in upstream plantations.”
