Olam International has entered into a joint venture with the Lababidi Group to set up a port-based sugar refinery in Nigeria.

The company said that the total project cost amounts to approximately US$200m, which is expected to be phased over three years from 2011 to 2013.

The project cost is expected to be funded by 50% of equity (US$100m) and 50% of debt (US$100m). Olam’s equity contribution for its share of investment would be approximately US$80m. Lababidi, or LG, will contribute about US$20m in equity

LG is one of sub-Saharan Africa’s major diversified business groups with interests in wheat milling, telecommunications and port real estate.

The group was formerly one of top three wheat millers in Nigeria until it divested Crown Flour Mills to Olam in January 2010. It continues to operate wheat mills in Guinea Conakry and controls Starcomms Nigeria’s fourth largest telecommunications operator and West Africa’s largest fixed and wireless telecommunications provider.

Last month, Singapore-based Olam booked an increase in first-quarter profits, boosted by an increase in sales volumes.

For the three months to the end of September, the firm earned net profit of S$29.7m (US$23m) after tax, an increase of 56% over the corresponding quarter last year.