Tuesday May 24, 2005 MAASVLAKTE (Netherlands): Leading palm oil producerIOI Group Bhd expects growth potential for its exports to Europe, Chinaand the United States in the coming years.

Group executive director Datuk Lee Yeow Chor said in an interview that hiscompany expected to export one-third of its output, or 450,000 tonnes ofcrude and refined palm oil products, to Europe in the next year.

The rest will be destined for China and India, and smaller amounts to theUS, which is a traditional soy oil consumer.

"(Palm oil) consumption in Europe has grown very significantly in the pastfew years. Europe is the biggest or second biggest consumer of palm oil inthe world," Lee said.

"There will be a good prospect for palm oil in the United States. We alsoexpect China to buy more palm oil," he said.

Asian producers and traders have been trying to find new markets for palmoil as they struggle to compete with South American soybean oil in theirkey market, India, where they also face an unfavourable duty structure.

Lee Yeow ChorIn pursuit of a slice of Europe's huge vegetable oils market and taxbreaks provided by the Malaysian government, IOI, which runs some160,000ha of plantations, is building Europe's largest palm oil refineryat the port of Rotterdam.

Etienne Selosse, chief executive officer of IOI's Netherlands-basedEuropean arm Loders Croklaan, told Reuters the new refinery would process750,000 tonnes of crude palm oil (CPO) a year and supply mainly foodproducers in Germany, Britain, northern France and the Benelux.

He said investment in the new plant was 40mil euros and full commercialoperations would start in October.

The EU imports about 3.5 million tonnes of refined and CPO every year,chiefly from Malaysia and Indonesia, with one-third of the quantitiesshipped via Rotterdam.

Palm oil is used in Europe mainly for edible oils and margarine as well assoaps, detergents and a smaller amount for biodiesel.

IOI acquired Loders Croklaan from Anglo/Dutch food group Unilever in 2002.Loders has plants in the Netherlands, the United States, Canada and Egypt.

Lee and Selosse said palm oil-based production of power was another optionfor expansion of IOI's sales to Europe.

"We are studying this seriously. As a footstep we are planning to use palmoil to satisfy the power requirements of the refinery (at Rotterdam)," Leesaid.

"These plans are just for the Netherlands at the moment. We expect thatpalm oil will also start to be used for production of power in othercountries as well," he said.

Selosse said the share of palm oil for production of green energy inEurope was likely to increase but added that his company had not yet beenapproached by biodiesel producers.

Industry analysts have forecast that about 20% of Europe's biodiesel, mostof which is currently made of rapeseed oil, could come from palm oil inthe next five years. " Reuters