WORLD’S BIGGEST BIODIESEL PLANT FOR SABAH
KOTA KINABALU: Sabah is set to become the premier bio-diesel producing area in the world with the imminent setting up of a plant capable of producing 300,000 tons a year at the Palm Oil Industrial Cluster (POIC) in Lahad Datu.
The designed output makes the plant the biggest of its kind in the world.
And, It is envisaged that the plant will have an initial capacity of 150,000 tonnes when it goes into production in September 2007. Full capacity is expected to be achieved in December 2008.
So far, the biggest bio-diesel plant in operation is in the UK which has a 200,000-ton production capacity followed by the one in Darwin, Australia which produces up to 100,000 tons a yea.
Three palm diesel plants, each with capacity of 60,000 metric tonnes per year, have been planned for Peninsular Malaysia.
The palm oil-based bio-diesel plant in Lahad Datu is 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.
The proposed name of the JV company is Palm Oil Biodiesel International Sdn Bhd. As its name implies, it will be incorporated in Malaysia. The Company will have a five-member Board, chaired by a POIC Sabah nominee.
A joint-venture framework agreement was signed between the three parties at the Ministry of Plantation Industries and Commodities in Putrajaya Monday (12 Dec 2005) witnessed by Minister Dato Peter Chin Fah Kui and the South Korean Minister of Commerce, Industries and Energy, Mr Lee Hee Bong. The Minister of Industrial Development, Datuk Ewon Ebin who is also the chairman of POIC Sabah Sdn Bhd, was also present with several ministry officials.
When in full capacity, the JV is expected to involve some US$50 million (about RM180 million) in investment.
Also signed at the same function was a Memorandum of Understanding between Malaysia Palm Oil Board and the Korean Institute of Energy Research on collaboration in biofuel research.
POIC Sabah Sdn Bhd chief executive officer, Dr Pang Teck Wai, signed on behalf of the company, while Suria Sama Resources and Eco Solutions were respectively represented by Managing Director Teo Vei Kim and President/CEO Dr Hwang Jong Sic.
The JV framework agreement will be followed by a shareholders’ agreement in three months, after a further feasibility study and the acquisition of the necessary permits.
Most of the bio-diesel produced at the Lahad Datu plant is expected to be exported to South Korea, where laws have being enacted to compel the use of bio-diesel, the Korean minister said in a post-signing press conference. South Korea is also the world’s biggest importer of energy. The country buys about 23 percent of its LNG from Malaysia, mostly from Bintulu, Sarawak.
Ewon describes the enthusiasm shown by the South Korean government in supporting Eco Solutions’ investment in Sabah confirms that the State Government made the right decision in aggressively promoting downstream palm oil industries.
"The presence of a high-level minister from Seoul underlines the Korean government’s support for the joint-venture," he said. "Because of the size of the proposed biodiesel plant, I expect it to have a huge impact on the growth and direction of oil palm plantation development and palm oil down stream industries in Sabah and neighbouring Sarawak as well as Indonesian Kalimantan."
He sees the agreement as a significant development not only in that the bio-diesel plant will act as an anchor industry for the development of the Lahad Datu POIC, but also consolidates investors’ confidence and creates spin-off industries such as those producing phytonutrients such as vitamin E, sterols, lecithin and co-enzyme Q
According to him, the sharp increase in fossil fuels has hastened the urgency in the world in looking for alternative energy sources. "Bio-diesel is the answer, and the major challenge in ensuring the success of bio-diesel industry in the feed-stock supply," he said.
"We have the supply of palm oil to support this industry. We are best positioned for this industry to take off on a massive scale in this region because of huge oil palm plantations coming up in our neighbours – Kalimantan," Ewon said.
Malaysia herself has big bio-diesel ambitions. A national bio-fuel policy is being drafted in the country’s effort to replace part of its fossil fuel consumption with ‘green’ fuel from palm oil. According to a recent government announcement, by January 2007, Malaysia’s military and transport sector are expected to begin using palm diesel.
"The Federal Government of Malaysia clearly recognizes the potential in Sabah and is considering making Sabah the palm oil hub as well as the third port of delivery of palm oil futures in Malaysia," Ewon said.