The largest palm oil producer in Australasia will raise 90m next week in a float on the London Stock Exchange to cash in on an unprecedented boom for the commodity.
New Britain Palm Oil, operator of 40,000-hectares of plantations in Papua New Guinea and the Solomon Islands, plans to use the new expected 88.9m in proceeds to double its plantation area over the next seven to eight years. The listing will value the company at 362m. Executive director Alan Chaytor said now was "the right time" to push ahead with the listing. In the past year, the price of palm oil has nearly doubled, from about $580 per tonne to as much as $950 per tonne.
The increase is due to myriad factors, including rising interest from the energy industry in palm oil as a potential source for biodiesel, as well as massive demand from China and India as an ingredient for a range of foods. Competition for land for the planting of other food crops such as wheat and soy beans has also pushed the price of plantation land up, further boosting the price. "Land competition has become fierce," Mr Chaytor said.
Environmental groups such as Greenpeace have spoken out against the global campaign to stop the spread of palm oil plantations, which are cropping up throughout South-east Asia and is blamed for mass deforestation. New Britain Palm Oil sells almost exclusively to the European market. Under the EU's agreement with the African, Caribbean and Pacific (ACP) nation, to which Papua New Guinea is a signatory, palm oil from the country can be imported duty free into the bloc. The company's shares, which have been listed on Papua New Guinea's Port Moresby Stock Exchange since 1999, will begin trading in London on the full list on 17 December. Kaupthing Singer & Friedlander is handling the float.
Palm oil is used in "about one in every two products in your shopping trolley", said Mr Chaytor, from peanut butter and bread to washing detergent and shampoos. Demand for alternative fuels and population pressures mean that demand is expected to double by 2030.