IOI Corporation Bhd executive chairman Tan Sri Lee Shin Cheng (left) and ED Datuk Lee Yeow Chor at the AGM

30/10/06 (The Edge News)  -  IOI Corporation Bhd’s bottom line is expected to be significantly boosted by the soaring crude palm oil (CPO) price that may average about RM1,900 per tonne next year, said IOI Corp group executive chairman Tan Sri Lee Shin Cheng.

On the back of the anticipated rising CPO prices, the company is spending RM120 million to expand its existing refinery in Johor to double its production capacity.

Speaking to reporters after the company’s AGM in Putrajaya on Oct 30, Lee said the expansion of the refinery was expected to be completed by March next year.

He said CPO price would rise further next year on growing global demand due to robust downstream activities, including oleochemicals and food ingredients, as well as being a cheaper alternative to other edible oils such as rapeseed and soy oil.

“Palm oil has already gone up from (an average of) RM1,400 per tonne last year to between RM1,500 and RM1,600 this year. I am confident it will touch (on average) RM1,900 (for 2007),” Lee said.

He said IOI Corp was also looking at expanding its refinery in the Netherlands, as the existing plant had been running at full capacity within a year of operations.
 
Lee said the company had converted its plant in Chicago to use palm oil instead of soy oil for the production of fats as food ingredients.

“We (the Chicago plant) now process 170,000 tonnes of palm oil per year and looking at the trend this year, we expect it (the demand for CPO) to increase by 10% to 15% this year,” Lee said.

Meanwhile, Lee said IOI Corp was “looking seriously” into venturing into biodiesel. “We view it as a possible value-added venture for palm oil. But if we do it, we will produce it at a much better quality.”

On its proposed US$500 million (RM1.84 billion) convertible bonds, he said IOI Corp would issue the bonds by the first quarter of next year with the proceeds for the settlement of inter-company loans, bank borrowings, capital expenditure, working capital and for future investments to be identified.

Responding to speculation that IOI Corp intended to take IOI Properties Bhd private, Lee said: “There is no plan to privatise IOI Properties as yet.”

He said IOI Properties was expected to complete the construction of a shopping complex in Hyderabad, India by the first quarter of next year. The complex has a gross development value of RM100 million, with IOI Properties having the option to sell or lease the shoplots.