30/10/2010 (The Star Online), Putrajaya - Second-largest listed palm oil planter in Malaysia IOI Corp Bhd is looking to expand into China’s downstream business of palm oil when the timing is right.

“Timing is very important. For now, we are very busy with our refineries in Pasir Gudang Johor and Rotterdam, Netherlands. When the timing is right, we will go into the downstream business in China,” IOI Corp group executive chairman Tan Sri Lee Shin Cheng said after the company’s AGM yesterday.

As at June 30, the group has four refineries with a total refining capacity of approximately 3.7 million tonnes. It has one refinery in Sabah, two in Pasir Gudang and one in Rotterdam.

The refinery in Rotterdam has increased its refining capacity from 825,000 tonnes to 1.32 million tonnes, making it the largest palm oil refinery in Europe.

On the prospects of palm oil prices, Lee said it was like a dream to see crude palm oil (CPO) prices hitting RM3,300 to RM3,400 by the first quarter of 2011. “Everywhere in the world, demand for edible oil is increasing, particularly from India and China. We are very positive for the long term.”

Lee added that the palm oil industry played a very important role for Malaysia to achieve its status as a high income nation.

“First, we have to increase more downstream and value added activities. Second, we need to increase our productivity.

“Currently, Malaysia is producing about four tonnes per ha. With the present planting materials, we can increase this to six tonnes and eventually eight tonnes,” he said.

Lee said the smallholders were pulling the overall productivity of the industry down. He said education for these smallholders was important.

Lee said he was not worried on competition from soya oil, as presently only 10% of its production was palm oil.

Lee hoped that fertiliser prices would be more stable in future. Fertiliser currently accounts for 50% of its total production cost from 30% three years ago.

Net profit for the year ended June 30 surged 107% to RM2.04bil, or 32.96 sen per share, against RM983.52mil a year ago mainly due to unrealised translation gain on long-term US-dollar denominated borrowings.