Olam International to invest US$43.5 mln in Ivory Coast

The global agri and food products supplier eyes a Greenfield cocoa processing, and a primary processing and warehouse facility in the world’s largest cocoa producer.

Olam International on Tuesday announced that it will invest US$43.5 million in Cote d’Ivoire (Ivory Coast) to set up a Greenfield cocoa processing facility in Abidjan as well as a primary processing and warehousing facility in San Pedro, according to a release from the company, to be funded by a combination of internal accruals and borrowings.

According to the release, the cocoa processing plant will process approximately 60,000 metric tonnes of cocoa beans into cocoa products, namely liquor, butter and cake. Olam is said to supply the plant with clean cocoa beans from its existing primary processing plant in Abidjan.

Meanwhile, Olam said the primary processing facility in San Pedro will be a modern drying, cleaning and sorting plant (or usine as defined by the cocoa industry) along with the necessary storage facilities to ensure that Olam continues to expand and develop its role in the bean export business in Cote d’Ivoire.

Cote d’Ivoire is the world’s largest cocoa producer accounting for 1.3 million metric tonnes or 40% of global production.

Olam’s Managing Director and Global Head for Cocoa, Gerry Manley, said, “Our investment into cocoa processing is part of our global cocoa strategy to integrate our value chain selectively by participating in attractive profit pools that will enhance not only our margins but also our overall competitive position in cocoa globally. Cote d’Ivoire is a key location for setting up our first, large Greenfield cocoa processing plant as the country’s cocoa products is an important ingredient to our customers’ chocolate recipes.”

Manley said the investment provides synergies with the group’s bean business as it leverages our strengths in sourcing traceable and certifiable cocoa beans directly from growers in various producing regions and in supplying to discerning customers who are looking to outsource their cocoa ingredients to reliable, independent suppliers.

The cocoa processing plant is expected to be commissioned by the first quarter of 2012 and it is expected to produce 48,000 metric tonnes of cocoa products and achieve a profit of approximately US$175 million and EBITDA margin of 10-12% by the end of its second year of production.