Olam and Mitr Phol Sugar Corporation (Mitr Phol), the world’s fourth largest and Asia’s largest sugar producer, have jointly announced a strategic partnership to capitalize on the attractive growth opportunities for sugar milling and refining in Indonesia.

Mitr Phol will invest US$100.0 million for a 50.0 percent stake in Olam’s wholly-owned subsidiary Far East Agri (Far East), which operates a sugar refinery in Indonesia, PT Dharmapala Usaha Sukses (PT DUS) in Cilacap, Central Java. Olam will retain the remaining 50.0 percent stake in Far East.

Joe Kenny, Managing Director and CEO for Sugar & Dairy, Olam International, explained the rationale for this partnership: “Our potential expansion into sugar milling will transform our overall participation in Indonesia’s sugar industry, which offers attractive investment and return opportunities due to its growing demand and persistent supply deficit. Mitr Phol is a natural partner given our shared vision and complementary strengths. Their strong sugar milling expertise coupled with our farm gate, sourcing and manufacturing capabilities will enable us to cater to the growing demand for sugar in Indonesia.”

Under the new agreement, Far East will explore the development of a green-field sugar milling facility in East Java. Upon completion in 2020, the sugar mill will source 1.2 million metric tons of cane from farmers.

Krisda Monthienvichienchai, CEO & President of Mitr Phol, said: “We are excited to begin our Indonesian journey by partnering with an established player like Olam. Our shared belief in the country’s potential and in creating long-term value will underpin our growth strategy there. We look forward to playing a meaningful role in helping Indonesia become self-sufficient in sugar production by working closely with each other, the authorities, farmers and all stakeholders.”

In addition to the joint venture, Mitr Phol will join Olam’s program of extending Good Agricultural Practices to farmers across Indonesia, which have been in place since Olam entered the country in 1996.