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KUALA LUMPUR, Feb 22 (Reuters) – Sime Darby Plantation, the largest oil palm planter in the world, is planning to pull out of its palm and rubber production business in Liberia, a country in Africa. the West, said sources from the industry.
The decision could be made because the Malaysian firm's return on investment in Liberia was lower than expected due to disappointing planting activity and new, stricter international environmental standards, the two sources said.
"Ultimately, it's all about return … and they (the company's leaders) are accountable to the board," said one source. They both refused to be identified because of the sensitivity of the problem.
Many plantation companies view West Africa as a new frontier for the global expansion of palm oil, lands in Indonesia and Malaysia, which together produce more than 80% of the world's palm production have become rare.
Liberian President George Weah said last week in a statement that the country could not afford to lose a major investor such as Sime Darby Plantation, and that the government was "determined to do everything possible to ensure that this investment stays here ".
The statement posted on Weah's official website also quoted Sime Darby Plantation management as saying that the company had spent more than $ 200 million on its operations in Liberia and had not reached the threshold of profitability, under the pressure of its board of directors to review the investment.
Sime Darby Plantation declined a request for comment from Reuters.
The company signed a 63-year concession in 2009 to develop 220,000 hectares of land in northwestern Liberia in oil palm and rubber plantations.
The concession represents one fifth of the total land area of Sime Darby Plantation, but so far only 10,000 hectares have been planted due to, among other things, an Ebola outbreak and stricter environmental standards. .
The head of Sime Darby Plantations in Liberia told Reuters last year that the company had not planted seeds for two years.
The company has written down RMB 111.8 million ($ 27 million) in its operations in Liberia for the year ended June 2018, according to its 2018 annual report.
The expansion of Greenfield in Southeast Asia has become rare, while green groups argue for more sustainable rules and "no deforestation" for palm oil production. (1 $ = 4,0810 ringgits) (Report by Emily Chow at KUALA LUMPUR, additional report by Alphonso Toweh at MONROVIA, edited by Joseph Radford)
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