Daewoo International buys Indonesia palm oil firm

Daewoo International Corp., the country’s largest grain trader, announced Thursday it has acquired an 85 percent stake in an Indonesian palm oil producer, upping the ante for its overseas agricultural business.

Through the 57 billion won ($53 million) deal with PT. Bio Inti Agrindo, Daewoo plans to cultivate a 36,000-hectare farm in Papua, the largest and easternmost province of Indonesia.

The affiliate of POSCO, a Korean steelmaker, is currently working on infrastructure projects there with an aim to produce 120,000 tons of crude palm oil annually starting 2015.

“Palm oil is versatile as it can be used as edible oil and as an ingredient for detergents, chemical products and biodiesel,” a Daewoo official said.

“We’re expecting to yield a very good return and secure business know-how as we oversee all processes involving development, production and sales for the first time among local trading companies.”

The Seoul-based trader has been stretching its overseas resource development drive to agriculture recently as the country struggles to ensure a stable supply and deal with price swings.

In Cambodia, it will soon begin irrigation works as part of its plan to set up a venture to plant rice and beans in the Southeast Asian country. In Siberia, the company targets forest resources.

Daewoo International shares closed flat on Thursday at 34,500 on Seoul’s main bourse.

By Shin Hyon-hee (heeshin@heraldcorp.com)