The REA group is principally engaged in the cultivation of oil palms in the Indonesian province of East Kalimantan, and in the production and sale of crude palm oil (CPO) and crude palm kernel oil (CPKO). The group’s principal operating subsidiary, PT REA Kaltim Plantations (REA Kaltim), manages oil palm plantations in Belayan Ulu, a remote area on either side of the Belayan River, a tributary of the Mahakam River in East Kalimantan. Some 18,000 hectares (over 26% of REA’s titled land bank) are designated as conservation reserves. The group has two methane capture facilities that generate electricity for the majority of its operations and employee housing, as well as supplying power to the villages in the vicinity of the group’s operations.
Palm oil is one of the 4 major vegetable oils (palm, soya, rapeseed and sunflower), which together account for over 80% of the total market for edible oils and fats. Of these 4 major oils, palm oil is the largest contributor, accounting for over 35% of total vegetable oil production and consumption annually.
The oil yield from oil palms (between 4 and 7 tonnes per hectare) is much greater than that of the principal annual oil seeds (less than 1 tonne per hectare), which means that palm oil can be produced more economically than its main competitor oils.
Palm oil is used as a cooking oil and shortening and in the manufacture of ice cream, margarine and non-dairy creamers. It is also used in products where animal fats are unacceptable on religious grounds. Palm oil is naturally hydrogenated and therefore has a high resistance to oxidation. This means that it does not contain trans fatty acids and has a naturally longer shelf life, making it particularly suitable for use in hot climates and as a frying fat in the snack and fast food industry.
The main traditional non-food uses for palm oil are in soaps and detergents and in the production of greases, lubricants and candles. Recently, the biofuels market has also provided a significant new non-food use for palm oil (accounting for some 18% of global consumption of the 17 major vegetable and animal oils and fats) where it is used as the feedstock for the production of biodiesel and as an alternative to mineral oils for use in power stations. The fatty acid derivatives of palm oil are used in the production of bactericides, cosmetics, pharmaceuticals and water-treatment products.