19/12/05 (The Star)  -  IT would be a natural progression for the Johor-based J.C. Chang group of companies to upgrade from the manufacture of cooking oil to biodiesel. The group would be commissioning its RM40mil palm biodiesel plant in Pasir Gudang next year.

Carotino Sdn Bhd, a subsidiary of the group, is the first company to adopt the Malaysian Palm Oil Board’s (MPOB) technology to produce palm based biodiesel at its pilot plant in Pasir Gudang two years ago.

Carotino, which is the manufacturer of the Carotino red cooking oil, is one of the first and more successful Malaysian companies to export some 3,000 tonnes of palm biodiesel per year mainly to Europe.

Managing director Shien Chang told StarBiz in Kuala Lumpur that Carotino's progression from producing cooking oil to palm biodiesel was a move forward for the group.

The Carotino cooking oil is characterised by its rich red hue.

The well-diversified J.C. Chang group owns and manages 100,000 acres of oil palm plantation with four crude palm oil (CPO) mills in the country. It is also involved in some mixed property development projects in Johor.

The Carotino manufacturing facility produces natural carotenes (pro-Vitamin A) and Vitamin-E rich oils and fats with a wide range of applications in foods, healthcare and skin care industries. 

These oils and fats could be incorporated into manufacture of biscuits, noodles, margarine, colourant in frying oil, mayonnaise, salad dressings, health foods and skin care products.

According to Chang, the palm biodiesel plant, a joint-venture between the group and MPOB, will produce 60,000 tonnes per year. It is slated for completion by the third quarter of next year.

The new plant is located close to Carotino's existing manufacturing facility, which is strategically located near the Pasir Gudang Port in Johor. 

“Similar to other biodiesel plants worldwide, we want to position our biodiesel plant near the port to facilitate exports,” added Chang, who is the son of J.C. Chang group founder and chairman Tan Sri Jesse J.C. Chang , reputable oil palm plantation icon.

He said apart from Rotterdam, in the Netherlands, the Pasir Gudang port was recognised as one of the world's largest vegetable oil handling terminal. 

Chang is confident that the group's biodiesel will become just as well-received as its Carotino red palm oil which was not only in demand in Malaysia but overseas markets.

Carotino will be investing over RM20mil in the palm biodiesel plant, to be financed from internally generated fund while MPOB is expected to invest about RM24mil.

“We have no problems selling our products overseas, particularly in the export of 3,000 tonnes of palm biodiesel per year,” Chang said.

However, if Malaysia came out with a biodiesel policy, which required biodiesel for domestic consumption, the group would be interested to be one of the major suppliers.

For now, Carotino would produce biodiesel mainly for export, he added.

On the ideal number of biodiesel plants, Chang said: “We have to consider the progress of the first plant, the biodiesel market demand, and increasing competition especially with otherplayers coming into the market.”

Chang said Carotino, however, was confident of working as a team with MPOB as “we believe Carotino will be able to register good growth in biodiesel.”

According to Chang, there are plans to build a bigger biodiesel plant, which would double the existing 60,000 tonnes capacity.

“Since we still have enough space to expand at the Carotino facility, we believe Carotino could easily double the size in the future,” he said.

However, he added that the group's board of directors have yet to make any commitments and was not looking at that direction at the moment. 

Commenting on the group's oil palm plantation, Chang said the group was always on the lookout for potential land bank expansion.

“We have always been restricted to the Malaysian boundaries. I believe the group will need to look outside Malaysia in future,” he added.

However, Chang was quick to point out that the group was still keen to explore plantation expansion opportunities within Malaysia.

Of the group's total plantation, 70% is located in Sabah while the remaining 30% is in West Malaysia.

When asked whether Carotino was interested to list on Bursa Malaysia, Chang said: “Eventually we may go for a listing but there are no plans at the moment.”

“I believe we will need time to look at some restructuring and do more homework before we can look towards that (listing) direction,” he added.

On the CPO price outlook, Chang said there was “upside” potential over the next 12 months, given encouraging factors like increasing global demand for biofuel and China imports.