13/10/06 (The Star)  - KUALA LUMPUR: It is still commercially viable to produce palm-based biodiesel despite weakening crude oil prices, said Golden Hope Plantations Bhd chief executive Datuk Sabri Ahmad. 

“It is feasible (for biodiesel conversion) if crude oil stays around US$58 per barrel and crude palm oil (CPO) continues to be traded within the RM1,450-to-RM1,500-per-tonne range,” Sabri told reporters after subsidiary Mentakab Rubber Co (Malaya) Bhd's AGM yesterday.

Golden Hope is the local plantation group with the most biodiesel plant projects in hand – three in Malaysia and one in the Netherlands. Once operational by end-2007, the plants are expected to generate an annual production of about 400,000 tonnes.

The group was reportedly looking at setting up biodiesel plants in China, South Korea and Indonesia.

Demand for biodiesel was not only driven by crude oil prices but also regulatory and environmental reasons, Sabri said. 

He said Europe and the US were supporting the move for alternative energy. “Many are putting up legislations to make it mandatory for biofuel usage,” Sabri said, adding that no petroleum tax was imposed on biodiesel in Europe.

He said from this year onwards Europe was expected to increase its palm oil uptake to about one million tonnes as the commodity was widely used as feedstock for power generation.

Earlier Sabri, who is also a Mentakab Rubber director, said the company would invest about RM30mil to expand its land bank to 10,000ha from the current 2,263ha as part of efforts to sustain its earnings.

“I believe a quick way to increase land bank is via acquisitions of existing plantations but, for green fields, we will look at Sabah, Sarawak and Indonesia,” he said.

Sabri said Mentakab Rubber currently had over RM20mil cash.

“However, we plan to finance future acquisitions using both internally-generated funds and other financing instruments,” he added.

Mentakab Rubber’s performance for the current financial year ending June 30, 2007 was expected to be better than the last financial year, he said, given the prospect of higher CPO prices. 

“For the final quarter of this year, we expect the price of CPO to strengthen at RM1,550 per tonne. It is set to be traded at at least RM1,700 next year given the growing usage of the commodity as an alternative fuel,” Sabri added.