The refinery will have a production capacity of 2,500 tons per day, or about 750,000 tons annually, said Mohd Ghozali Yahaya, chief executive of Minamas Gemilang, Sime Darby’s subsidiary in Indonesia.

The facility will be built on a six-hectare plot at Pulau Laut, near Kota Baru in South Kalimantan, and cost 330 million Malaysian ringgit (US$109.3 million), he said on Thursday. The plant, which will also include a jetty, is scheduled to start operating in 2013, he said.

Sime Darby’s eight refineries are responsible for 6 percent of global processing of crude palm oil, which is refined into cooking oil, margarine and cooking fats.

“Indonesia’s domestic market is huge, so we will focus on the domestic market first before considering exports,” Yahaya said.

Minamas has more than 280,000 hectares of land banked in Indonesia, scattered around Kalimantan, Sumatra and Sulawesi, and it will plant 40,000 hectares from that reserve, the chief executive said.

The targeted areas are those that had passed a study of their conservation value, completed by a third party, to ensure that the plantation areas would not harm the environment, he said.

The company has no plans to add more to its land bank but will try to optimize the use of its existing stock, Yahaya said. Minamas’s plantations cover 210,000 hectares, and the company operates 72 estates, 24 oil palm mills and five bulking stations.

Minamas has an average of 5.2 million metric tons in annual production capacity of crude palm oil, and the planted area represents 44.4 percent of Sime Darby’s total plantation.