“We’re looking to triple our capacity by 2016. That would include using new technologies that will make us the lowest cost producer in Malaysia. That is our target,” FGV palm downstream cluster processing head Wira Adam (inset) said at a press conference on introducing B30 biodiesel fuel for its fleet operations.

11/12/2014 (The Star) - Felda Global Ventures Holdings Bhd (FGV) will be ramping up its annual palm methyl ester (PME) capacity to 350,000 tonnes by 2016 from 100,000 tonnes currently.

The expansion comes following the acquisition of an adjacent plant in Kuantan, Pahang for US$47.5mil (RM168.2mil), said FGV palm downstream cluster processing head Wira Adam.

“We’re looking to triple our capacity by 2016. That would include using new technologies that will make us the lowest cost producer in Malaysia. That is our target,” he said at a press conference on introducing B30 biodiesel fuel for its fleet operations yesterday.

Wira Adam said FGV was the largest PME exporter in Malaysia currently and that with the increased capacity, the company would be the biggest PME producer in the country by 2016.

Separately, FGV revealed yesterday that three of its trucks were already running on B30 biodiesel fuel. The B30 blend comprises 30% palm-oil-based PME, with the remaining 70% comprising diesel fuel.

“We plan to switch all of (our) trucks to biodiesel fuel in stages and have all 450 of them running on it by 2016,” said Wira Adam.

“If you look at the price of diesel versus biodiesel, it looks less competitive for biodiesel. But we can rectify this by keeping our cost down,” he said.

With CPO prices falling in tandem with crude oil prices, Wira Adam, nevertheless, said he was optimistic about the company’s outlook.

“The price of crude oil has plummeted recently but we see it as an opportunity once the crude oil gains its momentum again. Then, we will have the advantage of producing low-cost biodiesel.”

According to him, about 70% of its biodiesel production was for exports.

“The highest demand for biodiesel comes from Europe, at around 12 million tonnes per year. This is followed by the United States which is around half of that.”

FGV targets its trucks to run on 100% (or B100) biodiesel fuel by 2016.

The company posted its first net loss at RM9.33mil for the third quarter ended Sept 30 compared with a net profit of RM22.89mil a year ago, while revenue jumped 34.3% to RM4.32bil from the same quarter previously.

Its core business, the plantation segment, recorded a 13.1% decline in profit from the previous year, largely attributed by a 99-year land lease agreement (LLA) fair value charge of RM316.59mil in 2014 versus a gain of RM135.46mil last year.

The LLA, which is between FGV and the Federal Land and Development Authority (Felda), is for the right to lease Felda land starting from 2012.

Under the agreement, FGV has to pay some RM250mil a year to Felda. The former has been paying on a quarterly basis.