Step-by-Step Guide to Setting Up a Palm Oil Refinery Plant

The palm oil sector is poised for growth in 2025, with benchmark crude palm oil (CPO) prices projected to average RM 4,222.7 per metric ton (USD 942.77), up 4.5% from 2024 . This upward trend is fueled by rising biodiesel mandates, especially in Indonesia (B40) and Malaysia, as well as robust edible oil consumption in India and China . Global production is expected to reach 80.34 million metric tons in 2024–25, driven by improved yields and stable supply from major producers .

Palm Oil Industry Market Research

India Palm Oil Market (2015)

• Overview : Valued at USD 5.16 billion, driven by population growth and economic advancements.
• Growth Factors : Massive potential with 100% FDI, financial aid, and 95% import reliance.
• Consumption Landscape : Palm oil holds a 40% consumption share in India.

Global Palm Oil Market

• Market Size (2021) : USD 63.65 Billion.
• Revenue forecast (2030) : USD 96.95 Billion
• CAGR : 5.0% from 2022 – 2030
• Projections (2024) : Expected to exceed 85 million metric tons, driven by sustainability and global demand.
• Challenges : Environmental concerns and deforestation impact expansion.

Setting up the best palm oil refining plant is a complex and multifaceted process that requires careful planning, compliance with regulations, investment in technology, and attention to sustainability. A comprehensive guide to setting up the best palm oil refining plant should encompass the following key steps: market research and feasibility analysis, site selection, design and engineering, machine procurement and installation, and quality control and monitoring.

What steps make up the palm oil refining process?

The palm oil refining process is designed to transform crude palm oil (CPO) into a high-quality, stable, and edible product by removing impurities, undesirable components, and off-flavors. The key steps are as follows:

1. Preliminary Purification

Crude palm oil (CPO) typically contains mechanical impurities (e.g., dirt, fiber fragments), water, and suspended solids. This step removes these via:

• Filtration: Using cloth filters or pressure filters to separate large solid particles.
• Centrifugation: High-speed centrifuges separate water and fine impurities from the oil, reducing moisture content to <0.1% and improving subsequent processing efficiency.

2. Degumming

Crude palm oil contains phospholipids (gums), which can cause cloudiness, oxidative instability, or off-flavors in the final product. Degumming removes these by:

• Adding water (or dilute acids like phosphoric acid) to the oil, which hydrates the phospholipids, causing them to aggregate into a separable sludge.
• The gum sludge is then removed via centrifugation, leaving “degummed oil.”

3. Deacidification (Neutralization)

This step targets free fatty acids (FFAs), which contribute to acidity, rancidity, and poor flavor. Two main methods are used:

• Chemical Neutralization: Adding a dilute alkali (e.g., sodium hydroxide) to react with FFAs, forming soapstock (a mixture of soap and water). The soapstock is separated via centrifugation.
• Physical Refining: For oils with high FFA content, FFAs are stripped off using high-temperature (220–260°C) and high-vacuum steam distillation, avoiding soapstock formation.

4. Bleaching

Residual pigments (e.g., carotenoids, chlorophyll) and trace impurities (soap, metals) are removed to improve color and stability:

• The oil is mixed with adsorbents (e.g., activated clay, activated carbon) at 80–120°C under vacuum.
• The adsorbents, loaded with pigments and impurities, are filtered out, leaving a pale, clear oil.

5. Deodorization

Volatile off-flavor compounds (e.g., aldehydes, ketones, short-chain fatty acids) are removed to enhance taste and shelf life:

• The oil is heated to 200–250°C under high vacuum (≤5 mmHg) while injecting live steam. The steam strips volatile compounds, which are condensed and removed.
• This step also destroys residual peroxides and improves oxidative stability.

6. Fractionation (Optional)

Palm oil is a mixture of triglycerides with different melting points. Fractionation separates it into:

• Palm Olein: Liquid at room temperature (used for cooking oils, frying).
• Palm Stearin: Solid at room temperature (used in margarines, shortenings).

Fractionation is done via controlled cooling to crystallize stearin, followed by filtration or centrifugation to separate the fractions.

The refined palm oil produced is clear, odorless, and stable, meeting food-grade standards for various applications.

A guide to setting up a palm kernel oil refinery plant

Setting up a palm oil refinery plant involves refining crude palm oil (CPO) into refined, bleached, and deodorized (RBD) palm oil, which is used in food products, biodiesel, cosmetics, and more. The process differs from palm kernel oil refining due to CPO’s unique composition (higher carotenoids, specific fatty acids) and market requirements.

Below is a step-by-step guide:

1. Feasibility Study & Market Analysis

Start with a thorough assessment to validate the project:

1.Market Demand: RBD palm oil is a staple in food processing (frying oils, margarine, snacks), biodiesel (as a feedstock), and cosmetics. Research local/global trends (e.g., demand for sustainable palm oil, biodiesel mandates) and competition.
2.Raw Material Availability: CPO is derived from palm fruit (Elaeis guineensis). Ensure proximity to palm oil mills or reliable CPO suppliers (local plantations or importers). Assess CPO quality (free fatty acids/FFA, moisture, impurities) and price volatility.
3.Cost-Benefit & ROI: Calculate capital costs (land, equipment) and operational costs (CPO, labor, utilities). Project revenue based on production capacity and market prices.
4.Regulatory & Sustainability: Understand local laws (environmental permits, food safety) and global standards (e.g., RSPO—Roundtable on Sustainable Palm Oil—critical for exports to EU, U.S., etc.).

2. Define Plant Capacity

Choose scale based on market demand and investment:

• Small Scale: 5–30 tons/day (batch processing; suitable for local markets).
• Medium Scale: 30–100 tons/day (semi-continuous; balances efficiency and flexibility).
• Large Scale: 100+ tons/day (continuous processing; economies of scale for exports).

3. Secure Location & Permits

• Location: Prioritize sites with:
  • Proximity to CPO sources (reduces transport costs; palm oil mills are often in tropical regions).
  • Access to utilities (water, electricity, steam) and logistics (roads, ports for distribution).
  • Compliance with zoning laws (avoid ecologically sensitive areas due to sustainability scrutiny).
• Permits: Obtain:
  • Environmental clearance (wastewater/air emissions; align with RSPO’s environmental criteria).
  • Food safety certification (e.g., FSSC 22000, ISO 22000 for edible oil).
  • Business licenses, tax registrations, and RSPO certification (if exporting).

4. Design the Refining Process Flow

CPO refining removes impurities (gums, FFAs, pigments, odors) to produce RBD palm oil. Key steps:

a. Pre-Treatment

Filtration: Remove mechanical impurities (fruit fibers, dirt) using pressure filters or centrifuges.
Heating: CPO solidifies at <24°C, so heat to 40–50°C to maintain liquidity during processing.

b. Degumming

Removes phospholipids (gums) that cause cloudiness.
Add water or dilute phosphoric acid to hydrate gums, then separate via centrifugation. CPO has lower phosphatides than other oils, making this step less intensive.

c. Neutralization (Deacidification)

Reduces FFAs (critical for stability). Palm oil often uses physical refining (vs. chemical) due to low gum content:
Physical Refining: Heat oil to 220–260°C under high vacuum (≤5 mmHg) and inject steam to strip FFAs, which are condensed and sold as by-products (used in soap making).
Chemical Refining: (Rare for CPO) Add alkali (sodium hydroxide) to react with FFAs, forming soapstock (separated via centrifugation).

d. Bleaching

Remove pigments (carotenoids, which give CPO a red/orange hue) and residual impurities (soaps, metals).
Mix oil with adsorbents (activated clay, silica) at 90–120°C under vacuum, then filter out spent adsorbents. Result: pale yellow oil.

e. Deodorization

Eliminate volatile compounds (odors, aldehydes) to extend shelf life.
Heat oil to 200–250°C under high vacuum while injecting steam to strip volatiles. Use heat recovery systems (e.g., heat exchangers) to reduce energy use.

f. Optional: Fractionation

RBD palm oil is fractionated into:
Palm Olein: Liquid at room temperature (used in frying oils, biodiesel).
Palm Stearin: Solid (used in shortenings, margarine, candles).

Process: Cool oil to 20–25°C to crystallize stearin, then separate via filtration or centrifugation.

5. Select Equipment & Suppliers

Choose equipment based on scale (batch vs. continuous):
 

 
Source from trusted suppliers (e.g., Alfa Laval, GEA, Desmet Ballestra) for food-grade, energy-efficient equipment.

6. Infrastructure & Utilities

CPO storage (insulated, heated tanks to prevent solidification).
Processing area (equipment arranged for sequential flow).
RBD oil storage (sealed tanks to avoid oxidation).
By-product storage (FFAs, soapstock, spent clay).
Lab (quality testing), offices, and maintenance.

7. Raw Material & Supply Chain

Secure long-term CPO supply contracts with mills or importers to stabilize costs.
Implement quality checks for incoming CPO (test FFA, moisture, carotene content) to adjust refining parameters.

8. Financial Planning

CAPEX: Land, construction, equipment (50–60% of total costs), permits, and initial inventory.
OPEX: CPO (60–70% of OPEX), labor, utilities, maintenance, and RSPO certification fees.
Funding: Explore loans, agribusiness grants, or partnerships with investors (emphasize sustainability for better access to funds).

9. Team & Training

Hire skilled staff:
Process engineers (oversight of refining).
Lab technicians (quality control: FFA, peroxide value, color).
Operators (equipment handling).
Sustainability officers (to maintain RSPO compliance).
Train teams on safety, RSPO standards, and equipment maintenance.

10. Quality Control

In-house lab tests:
CPO Incoming: FFA (<5% ideal), moisture (<0.5%), impurities.
RBD Palm Oil: Color (≤3 Red on Lovibond scale), peroxide value (<1 meq/kg), FFA (<0.1%), and RSPO traceability.