Indonesia's Charoen in $280 mln palm oil investment

JAKARTA, March 11 (Reuters) - A unit of agro and aqua culture firm
Charoen Pokphand Indonesia Tbk CPIN.JK plans to invest $280 million to
develop palm oil plantations on Borneo island driven by demand for
biofuel, a company official said on Tuesday.

Junaidi Sungkono, president director of PT Charindo Palma Plantation,
said the funds would be spent on plantations and six palm oil fruit
crushing mills in Indonesia's West Kalimantan province on Borneo. The
project is due to be completed in 2015.

"Palm oil prospects are very good. Our domestic demand for crude palm
oil-based biofuel has risen, so we would like to supply the needs,"
Sungkono told Reuters, without elaborating on how much it intended to
expand its plantations.

The firm launched its palm oil business in 2006 by buying 67,500
hectares (166,800 acres) and began planting last year. From this
initial investment, it expects to produce 239,200 tonnes of crude palm
oil in 2016.

Crude palm oil prices have jumped more than 45 percent since the start
of the year with Malaysia's benchmark May contract KPOK8 hitting an
historic high of 4,486 ringgit ($1,402) a tonne on March 4 compared
with 3,082 ringgit on Jan. 2.

Sungkono said that the firm planned to finance the project using $20
million of its own funds and the remainder through bank loans.

He also said the firm was looking at increasing its returns by
developing palm oil by-products.

"We are thinking of making oleochemical products in the future," he
said adding that the plan would depend on government programmes and
local infrastructure.

Indonesia is the world's top crude palm oil producer after surpassing
Malaysia and expects its crude palm oil output to reach 20 million
tonnes in 2010.

The country expects to produce more than 18 million tonnes this year,
up from estimated 17-17.2 million tonnes in 2007.

Made by crushing fresh fruit, the reddish-brown oil is the world's
second most popular oil after soy and is used in a wide range of
productions from tooth paste to ice cream and biofuel. ($1=9,175
rupiah)

(Reporting by Mita Valina Liem, editing by Ed Davies)