8/11/05 Business Times (Malaysia) - IOI Corp Bhd will, on its own, build its first biodiesel plant either in the Netherlands or in Pasir Gudang, Johor to capitalise on the green fuel's growing global potential.

An industry source said the plant could either be near the company's existing refinery Soctek Edible Oils Sdn Bhd in Pasir Gudang or in Rotterdam in the Netherlands.

However, the plant's capacity and cost are not immediately known although a biodiesel plant which produces 60,000 tonnes per year costs some RM40 million in Malaysia and between Euro25 million and Euro30 million (Euro1 = RM4.55) in Europe "IOI could also export the biofuel to Japan or South Korea, which offer incentives for biofuel such as carbon credit payments under the Kyoto Protocol," according to the source. He added that the biodiesel plant is a separate venture for IOI, which had earlier signed a deal to supply palm fatty acid distillate and refined, bleached and deodorised olein contract to Biox Group BV (BioX), Europe's largest and fastest growing supplier of special biofuel blends for the energy sector.

It was understood that the plan was mooted since early this year and has been reinvigorated due to spiralling crude oil prices of late as well as break rapeseed oil's monopoly in Europe.

IOI officials declined comment.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said last September that the Government plans to build three biodiesel plants in Malaysia - two in Port Klang, Selangor and one in Pasir Gudang.

Chin said a total of 10 companies have submitted their bids, of which only Golden Hope Plantations Bhd has received a letter of award to build its plant in Port Klang.

The three plants will be built on a joint-venture basis together with the Malaysian Palm Oil Board, with a stake of 50:50 in each plant.

Industry sources said the other companies expected to secure the jobs on the other two biodiesel plants are Fima Bulkers Sdn Bhd (part of Kumpulan Fima Bhd) and JC Chang Johor Group of Carotino Sdn Bhd.

IOI now joins several companies which over the past few months have also expressed their interest in building their own biodiesel plants such as Kulim (Malaysia) Bhd, TSH Resources Bhd, Golden Hope Plantations and the Sarawak State Government.

Biodiesel (to be used in diesel car engines) and biofuel (burnt in power generators) are a combination of palm oil and diesel at a predetermined ratio and burnt to generate power.

The environment-friendly edible oil has generated worldwide interest in recent months such as the US, Europe and Japan due to spiralling crude oil prices as well as its role in reducing greenhouse gas emissions that contribute to global warming.

Global demand for biodiesel is expected to touch 10.5 million tonnes in two years, with Malaysia having the potential to capture 10 per cent of that market, or some 1 million tonnes.

Malaysian Palm Oil Association chairman Datuk Sabri Ahmad, who is also Golden Hope Plantations group chief executive, had said that by exporting 750,000 tonnes of biodiesel per year, Malaysia stands to earn RM1.7 billion.