By Diplomacy Journal Lee Kap-soo

POSCO International’s palm business has become a major source of revenue for the company, with sales of USD 163.6 million (approximately KRW 213.8 billion) and operating profit of USD 52.56 million (approximately KRW 68.6 billion) last year.

Since beginning its farm plantation development in Papua, Indonesia, in 2011, the company started commercial production in 2016 and is on the right track, achieving its largest production volume of 208,000 tons in 2023.

Its PT.BIA corporation, the locally established company to run the farm business, turned profitable in 2018 and recorded sales of USD 44.82 million and operating profit of USD 6.35 million in 2019. 

In particular, in 2022, the company achieved record sales of KRW 219.6 billion and operating profit of KRW 102.2 billion for the year due to higher selling prices caused by rising oil prices and supply chain disruptions from the war in Ukraine. Until last year, the average annual profit margin of the palm business was 33%, contributing significantly to the improvement of the company’s operating profit margin.

Its investment in palm plantations and infrastructure amounts to approximately USD 250 million, and considering the operating profit of approximately USD 230 million secured so far, the company has recovered most of the investment within six years of full-scale palm oil production.

The reasons behind the sustainable performance of the palm business are ▲optimal growing environment, ▲establishment of efficient infrastructure, and ▲systematic farm management.