Sinar Mas Cepsa started operations on 14 September at its first oleochemicals plant in Indonesia, which will produce fatty alcohols and fatty acids from sustainably-sourced palm kernel oil (PKO).

The wholly-owned joint venture between Spain’s Cepsa and Indonesia’s Golden Agri-Resources (GAR) invested €300M (US$355M) over two years in the plant. Cepsa is a multinational oil and gas company and a leader in the production of linear alkylbenzene (LAB) used to make biodegradable detergents.

GAR is part of the Indonesian consortium of Sinar Mas businesses and the world’s second largest vertically-integrated palm oil company.

The Dumai, Sumatra plant has a production capacity of 160,000 tonnes/year of fatty alcohol.

GAR’s Lubuck Gaung refinery, which is certified by the Roundtable on Sustainable Palm Oil (RSPO) and located nearby, will supply the plant with sustainable, traceable PKO.

“Vegetable-based alcohols, rather than conventional petroleum derivatives, are increasingly in demand as a raw material for personal care products and liquid detergents,” Cepsa said.

The plant would primarily focus on markets in Asia and service demand from Sinar Mas Cepsa’s surfactant plant in Germany, which serves markets in Eastern and Western Europe.

“The global market for fatty alcohols is predicted to expand to 4.1M metric tonnes by 2025, up from 3.1M tonnes in 2016, demonstrating a five-year compound annual growth rate (CAGR) of 3.5%,” Cepsa said.

“Of this, a bulk of the revenue generated will come from Asia, which currently commands over 40% of overall demand.”

GAR chairman and CEO Franky Widjaja said the joint venture was created with a mutual vision to develop a global leading position in fatty alcohols and its derivatives, based on a supply of sustainably sourced raw materials.

“The launch of the Dumai plant is a critical step in achieving this vision.”

Sinar Mas Cepsa CEO Kung Chee Whan, said: “The Dumai plant leverages Cepsa’s technology and expertise in oleochemicals, and relies on GAR for raw materials—marking the second plant of this partnership.

Having already secured a foothold in Europe through the acquisition of our surfactant plant in Germany, we will definitely look into further downstream projects or expansion capacity in this part of the world.”

Cepsa CEO Pedro Miró said Cepsa’s chemicals business was a key part of the company’s growth strategy.

The energy firm had developed a chemicals division closely integrated with it refining business that produced and marketed the raw materials for high value-added products, principally used to make next generation plastics and biodegradable detergents.

GAR has a planted area of more than 480,000 hectares (including smallholders) in Indonesia. Its primary activities include cultivating and harvesting of oil palm trees; processing of fresh fruit bunch into crude palm oil (CPO) and palm kernel; merchandising and refining CPO into value-added products such as cooking oil, margarine and shortening.

It also has operations in China and India including a deep-sea port, oilseed crushing plants, production capabilities for refined edible oil products as well as other food products such as noodles.