15/12/05 (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 tonnes-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 tonnes 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 tonnes 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 neighbouring 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