Sime Darby eyes Latin America to boost palm oil trade

Malaysia’s Sime Darby Berhad is looking to buy refineries in Latin America as it struggles with poor margins and mounting costs, Bloomberg reported on 14 May.

The company had set aside RM400M (US$96M) to invest in refineries, although more would be needed for acquisitions and the it may consider turning to the debt market or listing unit shares, said Mohd Haris Mohd Arshad, CEO of the group’s downstream business.

Haris said Sime Darby had Latin America “on the radar” as it looked to expand its global refining capacity.

"If there are opportunities for us to acquire downstream assets in Latin America, we'll be very keen," said Haris, who is also managing director of Sime Darby Oils.

"This could potentially become an extension to our operations in Europe, and furthermore be an opportunity to expand into North America."

Sime Darby has had to travel as far as Liberia and Papua New Guinea for more land to harvest as Malaysia had committed to stop expanding plantations, Bloomberg wrote.

Latin America’s proximity to Europe (the second largest buyer of palm oil) was the appeal, according to Haris.

Regarding Europe’s strict regulations on imported palm oil quality, the shorter sailing time of 14 days from Latin America – compared with 30 days from Malaysia and 45 days from Papa New Guinea – would mean less risk of oil degradation en route.

Colombia was the world’s fourth largest producer of palm oil, and there was also some output from Guatemala, Ecuador, Peru and Brazil, Bloomberg wrote.