South Korean company takes over part of Madagascar to grow biofuels

The African island state of Madagascar has agreed to allow a South Korean company to take over huge tracts of its territory for farmland in a deal showing the worldwide scramble for resources across the continent.

By Richard Spencer in Beijing Last Updated: 12:29PM GMT 20 Nov 2008

Daewoo Logistics is taking a 99-year lease on 3.2 million acres of land, half the size of Belgium, to grow maize and biofuels, building its own roads and other infrastructure to service the new farms that will be created on currently undeveloped open space.
The amount is almost half the currently farmed land in the country.
The deal is a sign of the concern of many countries, particularly the intensely populated nations of the far east, about ensuring the safety and reliability of food and other supplies in an increasingly competitive world.
Chinese companies have signed similar deals across a number of African nations in recent years, even sending its own workforce to join local residents in working their new estates.
The Madagascar deal is striking by its size and, according to some reports, its financing. Daewoo Logistics, one of a new breed of Korean companies born from the break-up of its traditional, huge conglomerates after the Asian financial crisis, says it may have to pay nothing for the land.
What the four Madagascar regional governments with which it has negotiated stand to gain are jobs, roads and experience of advanced agricultural techniques.
Shin Dong Hyun, the Daewoo manager in charge of the project, said it was hoping to form a consortium with a Korean animal feed company and Chinese firms to run the project.
It was hoping eventually to grow 5 million metric tons of maize a year and 500,000 tons of palm oil, a major form of biofuel. It will use local labour and some expertise from South Africa.
South Korea is one of the most densely populated nations on earth, with 49 million people squeezed on to space the size of Scotland and Wales. Its shortage of arable land makes it the world's third largest importer of maize.
The company is working within a government-set ambition of increasing the amount of grain it produces either at home or through its own ventures abroad to half its supplies, from just over a quarter at present.
"We plan to improve productivity to produce 10 metric tons of maize per hectare but it will take quite a long time to reach that level," Mr Shin said.