Biodiesel in Malaysia

Sabah Set To Become World's Premier Biodiesel Centre
December 14, 2005 18:35 PM

KOTA KINABALU, 2005 Dec 14 (Bernama) -- Sabah, the biggest palm oil producing state in Malaysia, is set to become the world's premier bio-diesel producing area with a 300,000 tones-per-year plant to be set up at the state's palm oil industrial cluster in Lahad Datu.

The designed output would make the plant the biggest of its kind in the world. A UK-based plant of 200,000-tonne capacity is reputed to be the biggest in operation currently. A 100,000-tonne plant is being developed in Darwin, Australia.

Three palm diesel plants, each with capacity of 60,000 metric tones per year, have been also planned for Peninsular Malaysia, a recent statement released by KKIP Bhd under the State Industrial Development Ministry, said.

The palm oil-based bio-diesel plant in Lahad Datu will be a joint-venture between state-owned POIC Sabah Sdn Bhd, Sabah-based Suria Sama Resources Sdn Bhd and South Korea's Eco Solutions Co. Ltd.

KKIP said a joint-venture framework agreement was signed between the three parties at the Ministry of Plantation Industries and Commodities in Putrajaya Monday and was witnessed by its Minister Datuk Peter Chin Fah Kui and the South Korean Minister of Commerce, Industries and Energy, Lee Hee Bong.

Sabah State Minister of Industrial Development, Datuk Ewon Ebin, who is also the chairman of POIC Sabah Sdn Bhd, was also present at the event.

When in full capacity, the JV is expected to involve some US$50 million (about RM180 million) in investment.

It is envisaged that the plant will have an initial capacity of 150,000 tones when it goes into production in September 2007. Full capacity is expected to be achieved in December 2008. Most of the production is also expected to be exported to Korea.

The proposed name of the joint venture company to be incorporated in Malaysia will be Palm Oil Biodiesel International Sdn Bhd. The Company will have a five-member Board, chaired by a POIC Sabah nominee.

Because of the size of the proposed biodiesel plant, Ewon said it was expected to have a huge impact on the growth and direction of oil palm plantation development and palm oil downstream industries in Sabah and neighboring Sarawak. He said the bio-diesel plant will not only act as an anchor industry for the development of the Lahad Datu POIC, but also consolidate investors' confidence and create spin-off industries such as those producing phytonutrients such as vitamin E, sterols, lecithin and co-enzyme Q.

POIC Sabah is wholly owned by the Sabah state government and its main mission is to develop palm oil industrial clusters in Sabah to encourage downstream processing of palm oil.

-- BERNAMA Bernama.com
Malaysian National News Agency

Biogas project being explored by oil palm plantation sector in Sabah can create a positive image for the oil palm industry.

This is an environment friendly industry which gives serious consideration to the protection of the environment.

The technology for biogas production from oil palm waste is not just environment friendly but also helps in the electricity generation for the plants and in the process, reduce the dependency on fossil fuel which is a source of air pollution.

Previously, the disposal of waste from oil palm and the oil palm mills, posed a lot of problems for environment but now it has become a source of electricity.

Commercialization of palm biodiesel is a new development in the palm oil industry Palm biodiesel is an alternative fuel for petroleum diesel.
Oil palm is the most productive oil seed in the world. One hectare of oil palm plantation yield 5,000 kilograms of crude oil. And for soybeans and corn generate only 446 and 172 liters per hectare, respectively.
The EU recently agreed to replace 10% of its transport fuel with biofuels, including palm oil, by 2020.

Other than biofuel, oil palm is used as an ingredient in food products to engine lubricants to a base for cosmetics. Palm oil is becoming an increasingly important agricultural product in Asia.
Indonesia is now the world’s second largest producer of palm oil, oil-palm plantations covered 5.3 million hectares of the country in 2004. These plantations in Indonesia generated 11.4 million metric tons of crude palm oil with an export value of US$4.43 billion and brought in $42.4 million.

Biofuels have major positive or negative effects on natural forests, forest dwellers and owners.

Positive	Negative
Biofuel from oil palm plantations could increase the value that can be derived from previously forested land and help to promote economic prosperity and alleviate poverty—leading to a higher standard of living with fewer people depending on the remaining forests for subsistence.	Demand for biofuels could increase competition for land, threaten food production and exacerbate inequality between rich and poor (Astyk 2006). In 2005, Indonesia stated its

Biogas Plant
Biogas Plant at the Sawit Apas Balung mill is owned by Kumpulan Sawit Kinabalu

The biogas plant project is the first for Kumpulan Sawit Kinabalu, a state government agency, and in line with its aim to create sustainable wealth while taking into consideration the protection of the environment in economic operations.
Kumpulan Sawit Kinabalu managing director, Othman Walat said since the biomas plant at the Sawit Apas Balung mill began operations, the cost of energy production had been successfully reduced by 85 per cent and as a result, increased the mill’s earnings by RM1.14 million.
Sawit Kinabalu plans to open seven more biogas plants at plantations owned by it throughout Sabah.
www.theborneopost.com/

Many Malaysian companies are doing joint business and joint ventures with Chinese companies.
Biodiesel producers would need to look at the cost of production and competitiveness against other fossil fuels and palm oil.
Malaysia produces about 300,000 tones of biodiesel in 2007, out of a total of 5.2 million tones which has been approved by the government. Palm oil is made into bio-diesel, which competes with crude oil, to make fuels for cars, power plants and factories.
Palm oil is traditionally used in food and cosmetics, but rising biofuel demand has sent palm oil prices surging by 12 percent this year.
Malaysia plans to sell palm-blended diesel at domestic pumps by the end of 2007 and, along with Indonesia, has set aside 40 percent of palm oil output for local biodiesel production.
Malaysia produced about 16 million tones of palm oil in 2007, up from an estimated 15.2 million in 2006. And India's imports of palm oil from Malaysia increased with India's cutting duties on palm products.
India reduced import duties on crude palm oil and palmolein in August, 2007 to 70 percent from 80 percent, while those on RBD palm oil and palmolein were cut to 80 percent from 90 percent.
Soy oil currently carries a 45 percent duty because of a WTO regulation.
India consumes about 11 million tones of edible oil a year and palm oil constitutes 40 percent of India's total edible oil imports of more than 4 million tones. India imports palm oil from Malaysia and Indonesia and soy oil from Argentina and Brazil.
Malaysia was committed to maintain palm oil supplies to traditional buyers despite higher allocation for biodiesel.