* To spend up to 6 million euros to double Malaysia capacity

* Says demand growing for speciality palm oil oleochemicals

18/11/2009 (Alibaba.com) - Belgian oleochemicals maker Oleon Holding NV will double its plant capacity in Malaysia to 34,000 tonnes in the next two years to meet growing demand for palm oil-based products in the food and auto sectors.

Oleon's Malaysian plant now uses 17,000 tonnes of palm fatty acid and glycerine, a tiny percentage of the Southeast Asian country's annual palm-based oleochemical production of 2.1 million tonnes.

That uptake will rise, thanks to growing European and U.S. demand for biodegradable lubricants for vehicles and performance enhancing fuel additives made from palm oil, the managing director of Oleon Malaysia, James de Caluwe, said on Thursday.

"Asia is also a growth area as markets grow increasingly health-conscious and our speciality palm-oil-based oleochemicals can serve this purpose," de Caluwe told Reuters in an interview.

Oleon plans to spend 6 million euros ($8.96 million) to boost production capacity for the plant based near Malaysia's busiest port, in the central state of Selangor. For the first phase, it spent 15 million euros.

The firm produces more than 400,000 tonnes of speciality oleochemicals annually, mostly in Europe, which is also its main market.

French oilseeds group Sofiproteol owns Oleon after buying out its Belgian shareholders, including KBC Private Equity, last year.

Sofiproteol, the financial arm of France's oilseeds producers, generates sales of nearly 5 billion euros through subsidiaries such as Diester, which produces biodiesel, and Lesieur, the cooking oil manufacturer.

PALM OIL

Soyoil and rapeseed oil derivatives make up most of Oleon's raw material requirements globally but with the firm's production facility in operation in Malaysia since this year, its palm oil use is growing, said de Caluwe.

"We source 95 percent of our palm oil product requirements from Malaysia and it's from all the big boys," de Caluwe said. He did not elaborate on the firm's major oleochemicals suppliers in the country.

Palm oil-based oleochemical players in Malaysia include top plantation firms such as Sime Darby, IOI Corp and Kuala Lumpur Kepong. Malaysia is the world's No. 2 palm oil supplier and has an extensive oleochemicals industry.

"Palm oil is very versatile and we are making use of 60 molecule types from the vegetable oil to come up with all sorts of products and solutions for our customers," said de Caluwe.

Palm oil derivatives can be used to adjust the pour points of fuels and add colouring to food products, among other uses.

Oleon, which has five plants, mostly in Europe, says it has annual turnover of around 530 million euros. It uses natural oils and fats to produce chemicals such as glycerin and esters, which are then used by manufacturers of industrial products like detergents, cosmetics and paint.