24 May 2012
Felda IPO Update: Felda forms joint venture (MyBiomass) with Sime Darby and Malaysia Industry Government High Technology to undertake biofuel research and development project
Federal Land Development Authority (Felda) has teamed up with fellow plantation giant Sime Darby Bhd to make industrial sugar from oil palm biomass.
Felda Global Ventures Holdings Bhd president and chief executive officer Datuk Sabri Ahmad said returns from the venture would be big if the total costs including logistics to convert the biomass is below US$100 (RM314) per tonne.
Oil palm biomass is agriculture wastes such as tree trunks, empty fresh fruit bunches and fronds.
Felda and Sime Darby have a formed a special purpose vehicle (SPV) with Malaysia Industry Government High Technology (Might) to undertake the venture.
Sabri said the groups are doing a feasibility study.
"The three parties are evaluating whether we can convert biomass into non-edible sugar. We are studying all aspects from logistics and systems in the field to transporting the biomass to a central collection centre and processing factory in Pasir Gudang, Johor.
"If all can be done under US$100 per tonne, then it is commercially viable and the returns are big," Sabri told Business Times in an interview yesterday.
If feasible, MyBiomass will set up a plant that is expected to require 60,000 tonnes of feedstock a day to produce 1.2 million tonnes of sugar a day.
Sabri said the parties had signed the pact during Prime Minister Datuk Seri Najib Razak's visit to New York on May 17.
Felda and Sime Darby will each own a 40 per cent stake in the SPV called MyBiomass Sdn Bhd. Might will take up the remaining 20 per cent stake.
Sabri said industrial sugar potentially to be produced by MyBiomass is meant for oleochemicals, paints and chemicals industries, with players such as Petronas Chemicals, Badische Anilin-und Soda-Fabrik, British Petroleum, Archer Daniels Midland and DuPont.
"This venture is not the first of its kind in the world as Thailand is converting tapioca into sugar and Brazil is converting corn into ethanol. But it is the first for oil palm. So it has to be done at below US$100 per tonne because otherwise it is not competitive compared to other countries.
"We hope this will generate a new business opportunity for the palm oil industry," Sabri said.
Malaysia's oil palm sector churns out 100 million tonnes of biomass a year. MyBiomass aims to take up 20 per cent or 20 million tonnes of the waste to be turned into industrial sugar, which is known as isobutanol, butanediol and ethanol.