MARKET DEVELOPMENT
Felda Global Ventures in Talks to Buy SPC Biodiesel
Felda Global Ventures in Talks to Buy SPC Biodiesel
16/12/2013 (The Star) - Plantation conglomerate Felda Global Ventures Holdings Bhd (FGV) is in negotiations to acquire SPC Biodiesel Sdn Bhd, an “idle” biodiesel plant in Lahad Datu, Sabah, sources said.
Industry players said there were synergies to be derived from this given FGV’s plantation landbank in Sabah.
In July FGV bought a 100% stake in Pontian United Plantations Bhd for RM1.2bil. Pontian owns 16,188ha plantation land, mostly in the Kinabatangan and Lahad Datu area and a crude palm oil (CPO) processing mill and kernel crushing facility. Most of Pontian’s plantation land is also close to FGV’s existing plantations in Lahad Datu that covers around 99,000ha. FGV also operates a refinery in Lahad Datu.
“Logistics is an issue in this part of the country. There are efficiencies to be achieved with Pontian and with a biodiesel plant in the value chain, FGV could channel lower quality CPO for biodiesel production at lower transport costs,” said industry players.
They noted that FGV’s interest in SPC Biodiesel came at a time of a revival of the country’s once stagnant biodiesel industry. Existing idle biodiesel plants have now become the target of plantation companies.
Industry sources, however, said FGV was not the only company eyeing SPC Biodiesel and the ball park figure being tossed around is RM30mil for the plant.
However, FGV has an advantage considering it has a huge cash hoard – it has a net cash position of RM3bil.
When contacted by StarBiz, FGV declined to comment on the speculation. But a company spokesperson said this via an email reply: “We would also like to highlight that for FGV to become one of the top 10 agri-commodity players in the world within the next eight years, we are always exploring any potential deal that supports our growth strategy.”
SPC Biodiesel is owned by Australian-listed Sterling Biofuels International Ltd and situated in the purpose-built industrial park dedicated to palm oil-related industries known as the Lahad Datu Palm Oil Industrial Cluster (POIC).
According to Sterling Biofuels’ website, the SPC Biodiesel plant, which has a capacity of a 100,000 tonnes per annum, “is dormant as it is currently not economically feasible to commence production.” It had earlier been indicated that the SPC Biodiesel was to commence operations in 2007.
FGV is expanding its product offering into downstream including biodiesel. In April this year, it acquired a 100,000-tonne per annum biodiesel refinery at Kuantan Port for US$11.5mil or RM34.9mil. The biodiesel plant, which was recently commissioned, is located close to FGV’s estates in Pahang as well its refinery and oleochemical plant.
CIMB Research when commenting on this at that time had said that the acquisition price for the asset was fair as it was below RM100mil, which was the price quoted for building a biodiesel plant in 2006.
However, the research firm noted that FGV’s acquisition was costly compared to Genting Plantations Bhd’s acquisition of Global Bio-Diesel Sdn Bhd, a 200,000-tonne biodiesel plant in Lahad Datu for US$13.3mil or RM40.4mil in 2011. Global Bio-Diesel is also situated in Lahad Datu POIC, but unlike SPC Biodiesel, it is already operational.
Lahad Datu POIC chief executive officer Dr Pang Teck Wai told StarBiz that current biodiesel production was possible because it was now commercially viable as a result of the relatively low CPO price against other biodiesel feedstock such as rapeseed and soya. “With the world trending towards green energy, venturing into biodiesel appears to be a sensible diversification strategy for plantation companies.”
CPO prices have remained relatively low this year, hovering around the RM2,300 per tonne level. However, since October it has started inching up to the RM2,500 per tonne range. Back in 2011 for instance, CPO prices had traded between RM2,810 and RM3,955 per tonne.
On SPC Biodiesel, Phang said that while its plant was commissioned in 2006, it was unable to operate commercially due to the CPO price hike in 2007. CPO prices had spiked in that year peaking to RM4,005 per tonne on Feb 29, 2008. The high CPO prices had made biodiesel venture commercially not viable with many plants in financial decline.
Industry players said there were synergies to be derived from this given FGV’s plantation landbank in Sabah.
In July FGV bought a 100% stake in Pontian United Plantations Bhd for RM1.2bil. Pontian owns 16,188ha plantation land, mostly in the Kinabatangan and Lahad Datu area and a crude palm oil (CPO) processing mill and kernel crushing facility. Most of Pontian’s plantation land is also close to FGV’s existing plantations in Lahad Datu that covers around 99,000ha. FGV also operates a refinery in Lahad Datu.
“Logistics is an issue in this part of the country. There are efficiencies to be achieved with Pontian and with a biodiesel plant in the value chain, FGV could channel lower quality CPO for biodiesel production at lower transport costs,” said industry players.
They noted that FGV’s interest in SPC Biodiesel came at a time of a revival of the country’s once stagnant biodiesel industry. Existing idle biodiesel plants have now become the target of plantation companies.
Industry sources, however, said FGV was not the only company eyeing SPC Biodiesel and the ball park figure being tossed around is RM30mil for the plant.
However, FGV has an advantage considering it has a huge cash hoard – it has a net cash position of RM3bil.
When contacted by StarBiz, FGV declined to comment on the speculation. But a company spokesperson said this via an email reply: “We would also like to highlight that for FGV to become one of the top 10 agri-commodity players in the world within the next eight years, we are always exploring any potential deal that supports our growth strategy.”
SPC Biodiesel is owned by Australian-listed Sterling Biofuels International Ltd and situated in the purpose-built industrial park dedicated to palm oil-related industries known as the Lahad Datu Palm Oil Industrial Cluster (POIC).
According to Sterling Biofuels’ website, the SPC Biodiesel plant, which has a capacity of a 100,000 tonnes per annum, “is dormant as it is currently not economically feasible to commence production.” It had earlier been indicated that the SPC Biodiesel was to commence operations in 2007.
FGV is expanding its product offering into downstream including biodiesel. In April this year, it acquired a 100,000-tonne per annum biodiesel refinery at Kuantan Port for US$11.5mil or RM34.9mil. The biodiesel plant, which was recently commissioned, is located close to FGV’s estates in Pahang as well its refinery and oleochemical plant.
CIMB Research when commenting on this at that time had said that the acquisition price for the asset was fair as it was below RM100mil, which was the price quoted for building a biodiesel plant in 2006.
However, the research firm noted that FGV’s acquisition was costly compared to Genting Plantations Bhd’s acquisition of Global Bio-Diesel Sdn Bhd, a 200,000-tonne biodiesel plant in Lahad Datu for US$13.3mil or RM40.4mil in 2011. Global Bio-Diesel is also situated in Lahad Datu POIC, but unlike SPC Biodiesel, it is already operational.
Lahad Datu POIC chief executive officer Dr Pang Teck Wai told StarBiz that current biodiesel production was possible because it was now commercially viable as a result of the relatively low CPO price against other biodiesel feedstock such as rapeseed and soya. “With the world trending towards green energy, venturing into biodiesel appears to be a sensible diversification strategy for plantation companies.”
CPO prices have remained relatively low this year, hovering around the RM2,300 per tonne level. However, since October it has started inching up to the RM2,500 per tonne range. Back in 2011 for instance, CPO prices had traded between RM2,810 and RM3,955 per tonne.
On SPC Biodiesel, Phang said that while its plant was commissioned in 2006, it was unable to operate commercially due to the CPO price hike in 2007. CPO prices had spiked in that year peaking to RM4,005 per tonne on Feb 29, 2008. The high CPO prices had made biodiesel venture commercially not viable with many plants in financial decline.