Olam International Cocoa Processing Facility

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Olam International's new plant is located in Abidjan in The Republic of Cote d'Ivoire of West Africa. The new plant produces 48,000Mt of cocoa products. A new primary processing facility in San Pedro provides the plant with clean cocoa beans. In August 2010, Singapore-based Olam International announced its plans to construct a greenfield cocoa processing plant. The new plant is located in Abidjan in Cote d’Ivoire of West Africa. Olam also constructed a primary processing and warehousing plant in San Pedro. Olam invested $43.5m into the project with the amount being generated entirely through internal accruals and borrowings. The new facility became operational in 2012. The new plant is also expected to provide several benefits to Olam. As processed cocoa beans generate higher profits, the new plant significantly boosts Olam’s revenues, as well as provides logistical advantages in distribution and supply of cocoa products compared to the distribution of cocoa beans. Olam’s rationale behind constructing a greenfield plant in Cote d’Ivoire was to develop an integrated cocoa supply chain. The new plant is part of the company’s global plan to enhance its supply of cocoa beans and products to customers worldwide. The company has been present in Cote d’Ivoire since 1994 and has a wide range of businesses including cocoa, coffee, cashew, cotton and other imports. The new plant complements Olam’s existing cocoa business and provides certified cocoa products to its customers. Demand for certified cocoa products is steadily rising in the chocolate industry and expected to improve the profit margins of Olam. To ensure the quality of cocoa beans and to produce certified cocoa products, Olam has undertaken several initiatives in Cote d’Ivoire. Olam has partnered with a multinational chocolate company and trained a large number of farmers in pre-harvest and post-harvest techniques. The company distributed hybrid seeds to farmers and built 84 solar dryers for effective drying of the cocoa beans. Olam also provided premiums and bonuses to farmers as incentives to improve the quality of their produce. The new cocoa processing facility processes 60,000Mt of cocoa beans. Olam’s primary processing plant at Abidjan supplies the new plant with clean cocoa beans. The primary processing plant in San Pedro is equipped with state-of-the-art drying, cleaning and sorting equipment. It also includes storage facilities for storing cocoa beans for export. The San Pedro plant is used for exporting 40,000Mt of cocoa beans from south-west Cote d’Ivoire. At the new plant, cocoa beans are transformed into products such as cocoa liquor, butter and cake. Cocoa liquor and butter are supplied to Olam’s consumers in the chocolate industry. Cocoa cake produced at the new plant is converted into cocoa powder. The powder is distributed by Olam’s Solimar milling plant in Spain. The plant is a joint venture between Olam and Macao Commodities Trading. The new products help in expanding Olam’s customer base. Olam chose to locate its new plant in Cote d’Ivoire since it provided a favourable economic environment. Favourable economic policies and the availability of high quality cocoa beans were primary reasons for choosing Cote d’Ivoire as the location of the new plant. The Cote d’Ivoire region is the world’s largest cocoa producer with more than one million farmers engaged in cocoa farming. It accounts for 1.3 million metric tons or 40% of global cocoa production. The Cote d’Ivoire region also boasts strong infrastructure facilities such as ports, roads and electricity. In addition, the government of Cote d’Ivoire encouraged cocoa companies to process 50% of cocoa crop by 2015. It has formulated favourable export policies to enable companies to invest in value adding activities including cocoa processing.

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