POSCO International Establishes Food Holding Company in Singapore to Expand Palm Business

[Asia Economy Reporter Ki-min Lee] POSCO International announced on the 8th that it established a food business holding company, 'AGPA,' in Singapore early last month to expand its food business.

POSCO International is currently in the process of transferring 85% of the shares of its Indonesian palm plantation, which is held by the headquarters, to the holding company. After completing the share transfer by the end of the year, it plans to dispatch specialized personnel starting next year. It will promote the expansion of the palm business value chain and seek joint venture partners.

The reason POSCO International established a holding company in Singapore is that it judged that the current business structure centered on the Indonesian palm corporation (Bio Inti Agrindo) has limitations for expansion. The company explained that a governance structure transition was inevitable to advance investment projects.

Many major palm companies such as Wilmar and Golden Agri Resources have entered the Singapore market. Singapore itself is an excellent financial and logistics hub. This provides the advantage of being able to manage and operate the entire palm business while responding swiftly to market conditions.

Through the holding company, POSCO International will focus on acquiring new palm plantations that generate synergy with its existing palm business. It also plans to promote the expansion of an eco-friendly value chain, including investments in palm oil refining and biofuel plants, as well as biofuel investments based on renewable raw materials.

POSCO International has been engaged in the palm business in Indonesia since 2011. The Indonesian palm corporation began commercial production of palm oil (CPO) in 2016, increasing production from 56,000 tons in 2018 to 170,000 tons this year. During the same period, operating profit is expected to rise from $7 million in 2018 to $15 million in 2020, and $63 million this year.

In particular, palm oil is renewable and classified as a carbon-neutral business. POSCO International obtained the Indonesian Sustainable Palm Oil (ISPO) certification in 2019 and the international Roundtable on Sustainable Palm Oil (RSPO) certification this year.

Last year, POSCO International also declared that it would produce palm oil while protecting the environment and the rights and human rights of local residents, becoming the first domestic company to do so.

A POSCO International official said, "The food business is one of the company's major growth-driving sectors along with steel and energy," adding, "We plan to develop the Singapore holding company into a specialized management company capable of independently conducting palm business and use it as a foothold to grow into a food-specialized business company within the ASEAN region."