SHANGHAI, July 26 (Bernama) -- Major plantations group Kuala Lumpur Kepong Bhd (KLK) officially opened its US$70 million palm-oleochemical plant Wednesday in Zhangjiagang port city as part of its business strategy to diversify into China.

Taiko Palm-Oleo (Zhangjiagang) Co Ltd (TPO) has a production capacity of 150,000 tonnes. It would boost KLK's position as one of the world's biggest oleochemical manufacturer with total annual output of 650,000 tonnes by the year-end.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui was the guest of honour at the opening of the plant located in Yangtze River International Chemical Industry Park, about two hours drive from Shanghai.

TPO is 90 per cent owned by KLK while the remaining 10 per cent is held by Taiko Marketing Sdn Bhd which would market and distribute TPO products.

Taiko Marketing is a major chemical products distributor in Southeast Asia and China.

TPO, which is the first oleochemical plant in China, began production of fatty acids, glycerin and soap noodles to supply mostly to the Chinese market two months ago.

"Through innovation and bold steps taken, this plant is able to produce quality products especially in terms of colour and colour stability which are even better than that you get from imports," said KLK Group chairman Datuk Seri Lee Oi Hian.

Lee said KLK quickly initiated the project in 2003 when it heard that China would lift import quotas of palm oil early this year under the World Trade Organisation agreement.

China is the largest buyer of Malaysian palm oil, having imported nearly three million tonnes last year mostly for its food industry.

Exports of Malaysian palm-oleochemical products to China rose from 85,000 tonnes in 2000 to 267,000 tonnes last year.

Oleochemicals are used in industries such as cosmetic and personal care, health care and medical, coatings, textile, paper, foods and feed, metals, polymets and plastics, fuel and energy, agro and mining.

Zhangjiagang provides TPO the advantages of an extensive network of highways, river transport and coastal freight services.

TPO has also established warehousing facilities at Tianjin and Guangzhou, which are aligned with Taiko Marketing's distribution network to cover Shanghai, Guangzhou, Tianjin and Nanjing.

Its products are marketed under KLK's well-known Palmera and Palmsalt brands.

The opening ceremony was also attended by local senior officials, Zhangjiagang communist party secretary Huang Qin and Zhangjiagang Mayor Wang Xiang.

-- BERNAMA