Wilmar International, buying Australia’s biggest sugar refiner, said key Asian markets suffer from deficits of the sweetener and its purchase will help expansion plans in Indonesia.

Wilmar is willing to spend as much money as Sucrogen, acquired for A$1.75 billion ($2.08 billion) from CSR Ltd., needs for its expansion plans, Chief Executive Officer Kuok Khoon Hong told reporters at a conference in Singapore today. Wilmar plans to build 200,000 hectares (494,210 acres) of plantations in Indonesia’s Papua province within 5 years, Kuok said.

 

Kuok is taking advantage of Wilmar’s record profit to fund his strategy to diversify earnings at the world’s largest palm oil trader. Sugar demand in Asian markets, including China and India, outstrips annual supply by 30 percent, Wilmar said in a presentation filed today, citing the International Sugar Organization.

 

Indonesia’s attraction lies in “its deficit in sugar, the large tracts of land available to build sugar plantations,” Kuok said. Prices in the nation are also higher than international rates, he said.

 

Wilmar rose 1.2% to $5.95 in Singapore trading. Raw sugar has slumped 38% this year on the ICE Futures U.S. in New York. The sweetener reached a 29-year high of 30.4 cents on Feb. 1 after adverse weather reduced production in Brazil and India.

 

Wilmar is looking at building or acquiring a refinery on the Indonesian island of Java, the nation’s most populous province, Kuok said. Sucrogen can help spearhead a Wilmar push into plantations and milling operations in Indonesia and other countries, its Chief Executive Officer Ian Glasson said at the same conference.

 

It would cost at least a billion dollars to build 100,000 hectares of plantations, including port, infrastructure and a mill, Glasson said, without specifying the currency.

 

Buying Sucrogen will give Wilmar mills that produce 45% of Australia’s raw sugar and account for about 4% of global trade. Sucrogen is the world’s second-largest exporter.

 

Australia, the third-largest sugar exporter after Brazil and Thailand, ships most of its raw sugar to Asia.

 

Wilmar, whose 2009 profit rose to a record US$1.88 billion ($2.61 billion) as demand for vegetable oil soared in China, plans to enter the sugar-milling and the cane-plantation businesses in Indonesia, Kuok said March 1.