Ellah Lakes Plc is deepening its integrated agribusiness strategy with a move into palm kernel oil (PKO) processing, targeting one of Nigeria’s fastest-growing agricultural value chains as domestic demand continues to exceed local supply.
The company announced the acquisition of the first batch of expellers and presses for its planned Palm Kernel Oil mill, with installation scheduled for completion before the end of the third quarter of 2026. Once operational, the facility will produce both Palm Kernel Oil (PKO) and Palm Kernel Cake (PKC), allowing the company to capture greater value from its existing oil palm operations.
The investment comes at a time when the global palm kernel oil market is expanding steadily, while Nigeria faces a significant domestic supply gap despite being one of Africa’s largest producers.
Why PKO Matters
Palm Kernel Oil has become an increasingly important industrial commodity because of its versatility across multiple sectors.
It is widely used in food manufacturing, confectionery, soaps, detergents, cosmetics, pharmaceuticals and oleochemicals. Meanwhile, Palm Kernel Cake, the primary by-product of extraction, remains a key ingredient for livestock feed producers.
Unlike many agricultural processing businesses where waste can reduce profitability, nearly every component of the palm kernel has commercial value. Palm kernel shells are increasingly used as industrial biomass fuel, while PKC generates additional revenue from the livestock industry.
This creates multiple income streams from a single processing operation.
A Growing Global Market
The global palm kernel oil market is currently valued at approximately $15.6 billion and is projected to reach nearly $23.8 billion by 2035, supported by annual growth of about 3.9%.
Demand is being driven by manufacturers seeking natural vegetable oils for personal care products, specialty fats, processed foods and industrial applications.
Although North America is expected to record the fastest growth over the coming decade, global production remains concentrated in Southeast Asia, with Indonesia and Malaysia accounting for nearly half of worldwide supply.
International benchmark prices generally fluctuate between $1.70 and $2.10 per kilogram, depending on export origin and market conditions.
Nigeria’s Untapped Opportunity
Nigeria already produces an estimated 400,000 to 460,000 metric tons of Palm Kernel Oil annually from oil palm plantations concentrated across Edo, Delta, Cross River and Ondo states.
However, domestic demand is estimated to exceed 650,000 metric tons each year, creating a sizeable supply deficit that local processors continue to struggle to fill.
The shortfall has been driven by expanding demand from:
- Soap and detergent manufacturers
- Cosmetic producers
- Food processors
- Fast-moving consumer goods (FMCG) manufacturers
- Animal feed producers
Locally, a drum of Palm Kernel Oil currently trades between ₦300,000 and ₦350,000, depending on seasonal supply and regional availability.
For processors, palm kernels typically yield about 40% to 45% oil, while the remaining Palm Kernel Cake provides an additional revenue stream through sales to livestock feed manufacturers.
Building a More Integrated Business
Chief Executive Officer Chuka Mordi said the new processing facility represents another step in Ellah Lakes’ strategy of moving further along the agricultural value chain.
“The addition of PKO and PKC production will enable Ellah Lakes to capture further value from its oil palm operations, expand its product base and deepen its participation across the agricultural value chain,” he said.
Beyond palm processing, the company disclosed that its pig population has surpassed 1,000 animals, reflecting continued expansion of its livestock operations in Edo State.
Livestock remains an important source of shorter-term cash flow while the company’s oil palm plantations continue to mature.
The company has also begun selling gilts, creating another revenue stream while supporting livestock breeding operations.
Looking ahead, Ellah Lakes plans to install an abattoir and cold-chain facility to improve meat processing, product preservation and access to larger commercial markets.
What Investors Should Watch
The commercial success of Ellah Lakes’ latest investment will depend on execution rather than the acquisition of equipment alone.
Investors will be watching whether the company completes installation of the Palm Kernel Oil mill on schedule, secures sufficient supplies of palm kernels, operates the facility efficiently, and builds reliable markets for both Palm Kernel Oil (PKO) and Palm Kernel Cake (PKC).
The planned abattoir and cold-chain facility will also be important to monitor. If successfully delivered, the project could enhance the company’s meat-processing capacity, reduce post-harvest losses, improve product quality, and expand access to larger commercial markets.
Together, the company’s investments in palm processing and livestock signal a deliberate shift from primary agricultural production toward value-added processing and diversified revenue streams. That strategy has the potential to improve business resilience by reducing reliance on a single source of income and capturing more value across the agricultural supply chain.
BuyerMetrics Bottom Line
Nigeria’s Palm Kernel Oil market remains structurally undersupplied, with annual demand estimated at more than 650,000 metric tons against local production of about 400,000 to 460,000 metric tons. That supply gap presents a significant opportunity for processors capable of converting locally available palm kernels into higher-value products.
Ellah Lakes’ move into PKO and PKC production positions the company to participate in this opportunity while complementing its expanding livestock business. The key test, however, will be execution. Successfully commissioning the processing facility, maintaining a steady supply of raw materials, and securing sustainable offtake markets will determine whether the investment translates into long-term growth and stronger earnings.
