Newsletter: TheREVIEW

Subscribe to our free newsletter.
 

Home / Our Business / Agribusiness / Agribusiness

 

A Brown Energy and Resources Development, Inc. (ABERDI) is the wholly-owned subsidiary of ABCI engaged in agriculture, the company’s corporate vehicle to support the vast demand for premium oil palm by-products in Mindanao: refined bleached deodorized olein (RBDO), palm olein premium cooking oil, palm stearin, and palm fatty acid distillate (PFAD). It is recognized as a top player in the local palm oil industry. ABERDI extracts crude palm oil (CPO) from fresh fruit bunches (FFB) in its mill plant in Malubog, Impasug-ong, Bukidnon with a land area of 5 hectares. Storage tank capacity for CPO is 1,000MT and 2,500MT for RBDO.

ABERDI also has a 925-hectare oil palm plantation in Kalabugao, Impasug-ong, Bukidnon and in Tingalan, Opol, Misamis Oriental, 623 hectares of which are planted. The area is being leased from a People’s Organization called Kapunungan Sa Mga Mag-uuma sa Kaanibungan (KASAMAKA) under a 20-year development contract that expires in August 2026. Planting operations started in 2007, with an aggregate gross plantation area of 4,286 hectares (1,591 plantable area, 2,695 planted area).

ABERDI’s CPO mill constructed in 2006 has been upgraded from its initial capacity of 1.5 tons to 10 tons per hour with an average operating hour of 16 hours per day for 26 days a month. The RBD refinery also underwent further upgrades using major parts from Germany and Malaysia. The RBD refinery and fractionation machine with 50MT/day capacity has also been developed. The plant contains complete maintenance facilities like truck scale, admin office, staff house, motor pool, and stand-by generators (1,300Kw and 1,600Kw).

ABERDI’s RBD refinery and fractionation plant looks to cause an additional 30% to the gross profit margin with the production of Palm Olein products in addition to CPO. The capacity of the RBD oil plant is 50 T/D Semi-Continuous Palm Oil Refinery and 50T/D Palm Oil Fractionation. Buildings and other equipment have been constructed parallel to the construction of the refinery plant, such as the two refinery buildings, boiler, additional five tanks, warehouse, drying shed, complete electrical system, concreted road, etc. ABERDI is producing RBDO (95% recovery) and PFAD (5% recovery) on a 50 T/D Semi-Continuous Palm Oil Refinery, and Palm Olein (65% recovery) and Palm Stearin (35% recovery) on 50T/D Palm Oil Fractionation. These are in addition to the existing by-products of the CPO such as palm kernel and palm acid oil.

ABERDI has lined up cooperative ventures with suppliers of FFB and CPO, firstly to assure consistent supply to the mill, and secondly so that ABERDI can maximize the capacity of its refinery, and consider the possibility of distributing the finished products.

NAKEEN CORPORATION (NC)

ABERDI entered into a lease agreement with the Company for the plantation area inclusive of the standing crops, properties and equipment effective January 1, 2013 with the option to pre-terminate the lease agreement as agreed by both parties. Also, as provided in the lease agreement, that from October 1, 2012 up to December 31, 2012, ABERDI shall be given access to enter the Company’s premises for the set-up, construction and preparation for its intended use of the plantation area. The lease was extended up to April 1, 2020.

On March 6, 2012, the BOD of ABERDI and NC approved and authorized the application of merger of the two subsidiaries. Before the SEC approved the Articles and Plan of Merger, the BOD and the stockholders of both companies approved and ratified the subscription of ABERDI to the 750,000 unsubscribed shares of Nakeen Corp. at P 1.00 per share with 50M as additional paid-in capital. The BOD and shareholders of the company also approved the filing with Securities and Exchange Commission (SEC) the amended Articles and Plan of Merger reflecting the new capital structure of the Nakeen Corp. and specifying the effectivity date of the revised merger to be the first day of the subsequent month following the SEC approval.

On February 19, 2013, the BOD of Nakeen approved the filing of the amended Articles and Plan of Merger using the 2012 audited Financial Statements. The amended articles and plan was filed with the SEC on July 24, 2013 to amend certain provision on the articles and plan of merger as follows:

  1. Issuance of the Company’s shares to Nakeen’s shareholders in exchange of the net assets of the latter as result of the merger.
  2. Specify the effectivity date of the merger which will be the first day of the month succeeding the month of approval of the merger by the SEC.

On February 11, 2015, SEC denied the petition to amend plan of merger. The Company and Nakeen’s management filed a request for reconsideration to approve the petition.

As of March 18, 2016, the request for reconsideration is still pending before the SEC.

ABERDI, which is recognized as one of the top 4 players in the local palm oil industry, operates an oil palm nursery, oil palm plantations, palm oil mill, RBD refinery and fractionation plant in the Northern Mindanao area.

The area also hosts ABERDI’s 894 hectare oil palm plantation which it is leasing from a People’s Organization called Kapunungan Sa Mga Mag-uuma sa Kaanibungan (“KASAMAKA”) under a 20-year Development Contract that expires in August 2026. KASAMAKA has been granted a Community Based Forest Management Agreement over 2,510.8 hectares of forest lands by the Department of Environment and Natural Resources (DENR).

On March 1, 2007, ABERDI transferred its oil palm nursery and plantation operations to Nakeen.

In 2010, Nakeen entered into a Development Contract with Kapunungan sa mga Mag-uuma sa Barangay Tingalan (KMBT) for the establishment of an oil palm plantation in Tingalan, Opol. The contract has a term of 25 years. Aside from Kalabugao and Opol, Nakeen also manages plantations in Xavier Estates in Cagayan de Oro City, and in Impasug-ong, Bukidnon.

In addition, there are 930 hectares of land ready for planting in Tignapoloan, Misamis Oriental once the DENR issues the requisite permits. Below is a breakdown of their currently existing and potential plantation land as of June 2016.

Location Current Planted Area Total Plantable Area
Kalabugao, Bukidnon 920 hectares 1,087 hectares
Opol, Misamis Oriental 623 hectares 630 hectares
Xavier Estates, Misamis Oriental 44 hectares 44 hectares
Impasug-ong, Bukidnon 4 hectares 4 hectares
Tignapoloan, Misamis Oriental 0 930
TOTAL 1,591 hectares 2,695

External plantations under ABERDI’s OutGrowership program in as major supplier to ABERDI mill are located at ideal distances to its mill and refinery plant: Misamis Oriental (Balingasag) , North Cotabato (Pikit, Midsayap, Antipas, Magpet, Aracan, Carmen, Kabacan, Mlang), Sultan Kudarat (Tacurong), Bukidnon (Kadingilan), Lanao del Sur (Banisilan), Agusan del Sur (San Francisco), and Maguindanao (Montawal).

The RBD mill produces about 15,600MT of oil per year in 16 hours a day of operation, with CPO purchased from third parties as the CPO mill’s 10MT/hour capacity is not enough to produce the necessary feedstock for the refinery. There is high demand for RBD oil in the local market since the country does not produce enough to meet demand.

ABERDI’s sales and marketing team has determined that feed mills, traders, and local food manufacturers all have unmet demand for RBD oil. In 2016, marketing will be engaging into branding and packaging for palm olein and shortening. Route to market strategy will be divided into two service packages: direct serve (key accounts, outlets, local or national chain) and indirect serve (non-key accounts, outlets, local or national chain). Expansion will include the packaging initial of 6 filling machines from Taiwan, with monthly number of packs at 898,560 (50ml, 100ml, 250/350ml) and margarine and shortening. In line with the commitment to serve excellent products compliant with the government standards, good manufacturing practices, and strict food safety management systems, ABERDI is applying for Halal accreditation, License to Operate from the Food and Drug Administration (FDA LTO), and Hazard Analysis and Critical Control Points (HACCP).

Construction expansions involve road concreting going to packaging area, warehouse extension, pipeline and pipeline rock from tank farm to packaging area, and erection of 2 tanks for packaging day tank.