28/12/05 KUALA LUMPUR(Bernama) -- Diversified palm oil group, Kulim (Malaysia) Bhd, has teamed up with Germany's CremerOleo GmbH to set up two new plants to produce biofuels and other downstream speciality chemical derivatives.

Its managing director Ahamad Mohamad said that the construction of the two plants is expected to cost RM152 million with an initial capacity of 100,000 tonnes per annum.

The plants are expected to be in production as early as 2007, Ahamad said in a statement, here Wednesday.

He said that the first plant, on a 20-hectare site, would be built at Tanjung Langsat Industrial Area, Johor while the second plant in Jurong, Singapore.

Ahamad said that CremerOleo was chosen as the company has been working with them (CremerOleo) since 1994 and they are the largest purchasers and distributors of fatty acids from Kulim's subsidiary Natural Oleochemicals Sdn Bhd.

Germany's CremerOleo is a multi billion dollar family business established in Hamburg in 1946 and today it has manufacturing operations in Europe, US and Asia.

The Cremer group has been active in natural renewable fuels for several years and has made significant investments in new facilities in Germany and South America in 2005.

"With the growing trend in the usage of renewable energy resources, we expect the expansion of the two plants to take place soon and that the Tanjung Langsat land purchase would enable the site to be the base for an integrated biodiesel complex," Ahamad said.

He added that with global oil and petrochemical prices remaining high, the world has started to seriously look into biofuel as an alternative energy source.

He said that in the European Union, biodiesel production almost doubled from 1.06 million tonnes in 2002 to 1.93 million tonnes last year. In the US, biodiesel output has gone from 500,000 gallons in 1999 to 25 million gallons in 2004.

He expects the same level of success to take place in Malaysia. Earlier this year, the government announced that it was initiating the biodiesel push into global markets and was supporting efforts at research and development.

From Jan 1 next year, state-owned diesel-powered transport vehicles, army trucks and the plantation industry are to begin using biodiesel on trial basis.

-- BERNAMA