31/10/05 (Business Times) - Golden Hope Plantations Bhd will build two more biodiesel plants - one in Banting, Selangor, and another in Rotterdam, Holland, costing more than RM100 million collectively.

Earlier this month, GHope won a government award to build a RM40 million biodiesel plant, also located in Banting, which is expected to be commissioned in two years' time.

The plant at Golden Jomalina Food Industries Sdn Bhd will be built jointly with the Malaysian Palm Oil Board (MPOB) with an equity stake of 50:50 each.

GHope group chief executive Datuk Sabri Ahmad said the second plant in Banting, owned by Golden Hope Bioganic Sdn Bhd, will have a production capacity of 30,000 tonnes a year.

"The second Banting plant will cost upto RM10 million and is expected to be commissioned in June next year," Sabri told reporters in Kuala Lumpur yesterday after the company's annual and extraordinary general meetings.

"For the Holland plant, our wholly-owned refinery Unimills is talking to a big party in Europe to establish another plant with a capacity of producing 150,000 tonnes of biodiesel a year and will be ready between 15 months and 18 months from now, he said.

Sabri, however, declined to reveal the cost of building the Rotterdam plant but said that to build a biodiesel plant with a capacity of 60,000 tonnes a year cost up to RM45 million in Malaysia and between Euro25 million (Euro1 = RM4.57) and Euro30 million in Europe.

Sabri said for its first plant, MPOB will provide the equipment costing RM20 million while building structure, storage tanks and manpower will be provided by GHope.

As for its second Banting plant, Sabri said it is already producing tocotrienol (Vitamin E) and methyl esther (a biodiesel product) and GHope is expanding the facilities to produce biofuel in a bigger way.

GHope for now plans to operate only three biodiesel plants and will focus on how to market the green fuel once all the three plants are up and running.

"The European Union has ruled that biodiesel consumption, which currently accounts for 2.3 per cent of total fuel consumption, must be increased to 5.6 per cent by 2010.

"I don't think there will be enough biodiesel to supply the European market which consumes 2.3 million tonnes of rapeseed a year and palm oil-based biodiesel can fill that shortage," Sabri said.

Building biodiesel plants is the worldwide trend right now. Germany, for instance, has seven biodiesel plants to cushion the impact of spiralling crude oil prices.

Sabri said biodiesel will support crude palm oil prices at RM1,500 a tonne in 2006 because it will take away 5 per cent, or 500,000 tonnes, out of the national production of between 14.5 million tonnes and 15 million tonnes.

"This biodiesel is not for domestic consumption but for the export markets such as Europe, Japan, South Korea and China, and will be a good revenue stream for the company and Malaysia, he said.

On another note, Sabri said 36 per cent of the company's plantations are of prime age and it wants to buy more land in Malaysia and Indonesia.

During the meetings, GHope said it will pay a final dividend of 13 sen per share and a special dividend of 5 sen per share, involving a RM184 million payout to shareholders on December 12 2005.