Samsung to Invest $1.63 Billion in Indonesian Biodiesel Project

Oil Palm Plantation[social_buttons]

According to an article in the Jakarta Post, an official from the Indonesian government has spilled the beans on Samsung’s plans to invest up to $1.63 billion dollars in what’s sure to be a controversial acquisition of land for growing oil palms and construction of a biodiesel plant in Indonesia.

Without being specific, the head of Indonesia’s National Biofuel Development Team, Al Hilal Hamdi, said the company had already spent $163 million purchasing land and a factory. He went on to say that Samsung’s “total investment will likely increase by 10 times” that amount.

In the Jakarta Post article, Al Hilal Hamdi refused to say where the land was located, but he did divulge that it would encompass almost 62,000 acres.

Reportedly, the biodiesel plant will be online in 2009 and be capable of producing over 13 million gallons of fuel per year.

Indonesia is in the midst of a large-scale shift to biofuel production which is being orchestrated by the National Biofuel Development Team. As of March 2008, investment in biofuel development had reached almost $3.5 billion in the small country.

Indonesia has come under heavy fire recently for clearing rainforests at a record rate to plant oil palms. In a report entitled “cooking the climate,” Greenpeace concluded that Indonesia is the third largest emitter of greenhouse gases, mostly due to deforestation associated with the expansion of oil palm plantations.

To be fair, the production of biofuels is only one of many contributers to the expansion of palm plantations in Indonesia. Food products containing palm oil account for 70% of the world’s insatiable demand for the stuff, but with the rate of biofuel demand rising sharply in Indonesia, biofuel’s part is sure to grow.

The current rate of deforestation in Indonesia is staggering: 4.4 million acres of rainforest disappear there each year — in more human terms, that’s 380 US football fields an hour. This is enough for the Guiness Book of World Records to approve an entry in this year’s upcoming records book for Indonesia as the country with the world’s fastest rate of deforestation.

In response, the head of the Indonesian Palm Oil Association said that in the future, member companies won’t clear new land for oil palm plantations, but will only plant on land already being used for palm oil or on unproductive land that is idle.

Whether or not the Palm Oil Association can enforce that restriction is yet to be seen, especially considering that most of the plantations are out in the boonies and it’s not a government mandate.

Let’s just hope that Samsung is pursuing sustainable oil palm development as they move forward with their gigantic investment.

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Image Credits: Palm leaf background from seanmcgrath’s Flickr photostream. Palm oil plantation picture from a_rabin’s Flickr photostream. Images reproduced and altered under a Creative Commons license.

Nick Chambers

Not your traditional car guy.