Major palm oil grower Golden Veroleum plans to invest up to $1.6 billion in Sierra Leone in what promises to be the second largest investment in the industry here.

The subsidiary of the US-based Verdant Fund LP, which is controlled by the Singapore-listed palm oil giant Golden Agri-Resources, is eying over half a million hectares of land eventually. But Golden Veroleum director David Rothschild said in Freetown they will start with 20,000 hectares.

“We are negotiating a 50-60 years lease agreement with the government and locals in the South and Eastern Regions, especially Kenema and Pujehun districts,” he was quoted saying in a statement released by the Sierra Leone Investment and Export Promotion Agency (SLIEPA) on Thursday.

“Our initial investment will focus on building the required Infrastructure on the land for the construction of an oil mill at the company site,” he said.

Increasing demand for biofuels has made palm oil production a lucrative venture. The commodity is also a popular vegetable oil used in the manufacture of margarine and soap, among other products.

Annual production around the world are said to be worth about $20 billion.

Golden Agri-Resources is the world’s second-largest palm oil plantation company. Through Golden Veroleum, it controls the largest palm oil operations in Liberia where in 2010 it promised to invest $1.6 billion to develop over 220,000 hectares of plantations.

Sierra Leone and Liberia form a major part of what is called the new frontier for palm oil production in West Africa.

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