10/2/06 (The Star)  -  JOHOR BARU: Despite the latest venture into biodiesel production, Kulim (M) Bhd will remain focused on its traditional core business in oil palm plantation. 

Managing director Ahamad Mohamed said Kulim planned to expand its hectarage by 10,000ha annually. 

“We are looking at expanding about 7,000ha in Indonesia and 3,000ha in Papua New Guinea,” Ahamad told reporters after signing a joint-venture agreement for the biodiesel project with Peter Cremer (S) GmbH here yesterday. 

Kulim to-date has about 90,000ha of oil palm estates in Malaysia, Papua New Guinea and Indonesia. Ahamad, however, admitted that Kulim’s oleochemical and biodiesel divisions would overtake plantations as major earnings growth drivers. 

“The biodiesel ventures are expected to generate about RM600mil in turnover by 2008, while our subsidiary National Oleochemicals Sdn Bhd will likely contribute about RM1bil in turnover this year,” he said. 

Ahamad said crude palm oil (CPO) prices would likely benefit from structural changes taking place in the industry. 

“CPO prices are likely to strengthen further. It is estimated that biodiesel could add almost two percentage points to the usage of edible oil which has already averaged 4% growth annually,” he added. 

In addition, the potential abolition of edible oils tariff quota by China and the inclusion of trans-fatty acids into the nutritional labelling of food products in the US this year, will also boost CPO prices.