15/12/05 (Business Times)  -  IOI Corp Bhd yesterday confirmed it has plans to build its first biodiesel plant but remains undecided whether to venture big into the new sector.

The plantation-based company said should it decide on building the plant, which would cost RM100 million, it would either be in Pasir Gudang in Johor or in the Netherlands.

IOI's interest in the new fuel is based on the palm oil's rising global potential as an energy source. IOI Corp executive chairman Tan Sri Lee Shin Cheng said the group, however, is still studying whether it wants to venture into the biodiesel sector.

"We have not decided yet and are still considering whether to build or not. So it is difficult to put a timeframe. It could be in the Netherlands, or in Pasir Gudang, Johor, with a capacity of 150,000 tonnes a year," Lee said.

"We might build one plant. At IOI our culture is that whatever we do, we do it carefully so that the interests of our shareholders are looked after," Lee told reporters in Putrajaya.

He was met after the extraordinary general meetings of IOI Corp and the now-privatised IOI Oleochemical Industries Bhd yesterday.

A Business Times report quoting sources last month said the plant could either be built near the company's existing refinery Soctek Edible Oils Sdn Bhd in Pasir Gudang or in Rotterdam.

The biodiesel plant is a separate venture for IOI, which had earlier signed a deal to supply palm fatty acid distillate and refined, bleached and deodorised olein contract to Biox Group BV (BioX), Europe's largest and fastest-growing supplier of special biofuel blends for the energy sector.

Should the plan materialise, IOI would join several companies, which over the past few months, have expressed their interests in building their own biodiesel plants.

They include Kulim (Malaysia) Bhd, TSH Resources Bhd, Golden Hope Plantations, Carotino Sdn Bhd, Kumpulan Fima Bhd, Federal Land Development Authority and the Sarawak State Government.

Malaysia has issued 12 licences to build biodiesel plants, of which three are expected to begin construction soon.

IOI Corp also has businesses in oleochemicals and property development.

For the first quarter ended September, IOI's net profit dropped to RM173.4 million from RM210.1 before while revenue also dipped to RM1.3 billion from RM1.7 billion previously.

"You know IOI is a diversified group and when company A is not doing well, company B will be doing well. So that is how we maintain our profit.

Lee said due to the cyclical nature of its businesses as well the group's diversity, IOI is able to hedge its profits.

On IOI Oleochemical, Lee said the privatisation will be completed by March next year enabling shareholders to get their money and IOI Corp shares.