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Kulim buys PNG oil palm estates for US$175m

February 26, 2010 Leave a comment

Kulim (M) Bhd is paying US$175 million (RM597 million) to buy some 25,000ha of oil palm estates in Papua New Guinea from the world’s largest agribusiness company Cargill Inc, and Singapore government investment arm Temasek Holdings.

In its filing to the stock exchange yesterday, Kulim said the deal was expected to close by end-April. Kulim’s 51 per cent-owned subsidiary New Britain Palm Oil Ltd (NBPOL), will borrow US$200 million (RM682 million) to finance the purchase, out of which some US$25 million (RM85 million) will be used for capital expenditure at the three estates, namely Higaturu, Milne Bay and Poliamba.

In a telephone interview with Business Times yesterday, Kulim managing director Ahamad Mohamad said the single acquisition will see the group’s plantation acreage in Papua New Guinea increase 50 per cent to about 75,000ha. “Although this purchase will increase our gearing, it is not really an issue because the assets are already income-generating. We expect to be able to maintain our dividend payout policy of 30 per cent of our net profit,” he said.

NBPOL is buying an 80 per cent stake in the three estates from CTP Holdings Pte Ltd, a joint venture between Cargill and Temasek. The sale and purchase agreement covers only CTP’s oil palm assets in Papua New Guinea. CTP will continue to own and operate two oil palm plantations in Indonesia.

The remaining 20 per cent stake in the three estates are held by the Independent Public Business Corp of Papua New Guinea, an entity established to hold the majority of state-owned commercial assets.

Cargill and Temasek, via CTP, bought the 25,000ha from the UK’s CDC Group plc in 2005. After five years, they now want to sell the estates to NBPOL along with various commitments to the Papua New Guinea government.

“We believe there is more value in focusing on Indonesia. The oil palm plantations are the only investment we have in Papua New Guinea. Since no other Cargill business is actively investing in Papua New Guinea at this time, we do not have any internal synergies to increase the value of this investment,” Cargill senior vice-president Paul Conway reportedly said.

NBPOL, which is listed on the London Stock Exchange and the Port Moresby Stock Exchange, expects its new refinery in Liverpool, the UK, to start operating in April. It has a production capacity of 165,000 tonnes a year and counts United Biscuits, maker of McVitie’s Jaffa Cakes and Mini Cheddars, among its major customers.

NBPOL is also building a facility in Papua New Guinea that is being specially commissioned for chocolate maker Ferrero. This is expected to be completed by early next year.

Honeycomb Biscuit

February 22, 2010 4 comments
Below are some traditional foods that make their appearance on Lunar New Year. We have “yee sang”, mandarin oranges, dried Peking duck, barbecued meat snack called “bak kwa”, sticky rice pudding known as “nian gao”.
 
One of my favourite snacks is the honeycomb biscuit or kuih rose (in Bahasa Malaysia).

HONEYCOMB BISCUIT

Ingredients:-

8oz rice flour
8oz wheat flour
8oz sugar melted in 1 cup of hot water
2 eggs
2 cups of coconut milk

palm cooking oil to deepfry

Method:-
1. Sift and mix the rice and wheat flour together.
2. Melt sugar in hot water. Set aside the syrup to cool.
3. Mix in the flour with syrup and coconut milk. Fold until all lumps eliminated.
4. Crack in 2 eggs and mix.
5. Dip mould into heated palm cooking oil.
6. Once mould is heated, dip into batter and immerse into the wok. As the batter cooks, it loosens from mould.
7. Repeat mould dips between the batter and the wok.
8. Once biscuits starts to have a golden tinge, scoop up and drain off excess oil.

It is better to use cooking oil made from palm oil like Knife, Red Eagle, Neptune, Seri Murni, Seri Aji, Seri Mas, Chief, Cap Buruh instead of sunflower, canola or soy. This is because palm oil do not oxidise that easily and can withstand extreme deepfry heat. But once the palm cooking oil starts to darken, please dispose. Reheating of cooking oil too many times cause formation of artificial trans fat.

Consumption of artificial trans fat is bad for health. There is a mountain of medical evidence that show that the consumption of artificial trans fat is cancer-inducing and it also causes heart attack, stroke and Type 2 diabetes.

Indonesia plans CPO futures launch in April

February 17, 2010 Leave a comment

JAKARTA: Indonesia’s new commodities exchange yesterday said it plans to launch a crude palm oil (CPO) futures contract in April, marking the second attempt to create a local benchmark price in the world’s top grower.

PT Bursa Komoditi & Derivatif Indonesia, the new commodities and derivatives exchange (ICDX), said it hopes to succeed after rival Jakarta Future Exchange, known as BBJ, struggled to attract planters to trade CPO.

Instead, the industry uses Malaysian palm oil futures and the Europe spot price in Rotterdam as benchmarks.Indonesia wants a local benchmark which it feels will provide a better reflection of local supply and demand, and will eliminate currency risk factors.

Laren Tan, chief operating officer of ICDX, said in an interview that recruiting as many members as possible for the exchange was the key to boosting trade. He said companies that have already agreed to trade on the new exchange included the local unit of Wilmar International, Sinar Mas Agro Resources Tbk, Sampoerna Agro, Duta Palm, and Palm Mas Asri.

Brokerage firm Millenium Penata Futures, and Sinarmas Futures have also joined, he said, while Indonesia’s biggest listed plantation firm, PT Astra Agro Lestari, has said that it may join.

“A lot of people have shown interest at different levels. Based on our meetings, most of them are positive about the plan,” said Tan, who is a former executive director at Bursa Malaysia Derivatives Exchange, the Malaysia exchange where palm oil futures are traded.

BBJ’s president director, Hasan Zein Mahmud, said that after six months, only 29,000 tonnes of palm oil were traded at BBJ, just a fraction of Indonesia’s palm oil production of about 21 million tonnes in 2009.

The exchange will introduce spot and futures contracts for one to 12 month, and each of the four quarters of the following year. Members would have to pay security deposits of two billion rupiah (100 rupiah = RM0.04). Indonesia is also a leading supplier of other commodities including coal, tin, cocoa and coffee but plays almost no role as an exchange for these products, so traders have always used contracts traded outside the country as the benchmark for prices. – Reuters

Millers as green power producers

February 8, 2010 1 comment

Palm oil millers can help generate electricity for supply to the national grid and reduce power producers’ dependence on natural gas, which can then be channelled to other sectors.

Malaysian Industrial Development Authority director-general Datuk Jalilah Baba said two days ago that, from 2012, the government would be looking to importing gas to meet impending shortage in the country. Heavy users of natural gas include oleochemical producers and steel millers, who use the commodity as feedstock and fuel.

According to the Malaysian Palm Oil Board (MPOB), there are 417 palm oil mills in the country, out of which 246 are in Peninsular Malaysia. Mills emit methane from retention ponds after oil extraction. Methane is one of the many polluting gases in the environment contributing to the depletion of the ozone layer and global warming.

Palm oil millers can trap the methane to generate electricity and then sell it to Tenaga Nasional Bhd to be distributed in the national power grid. “We’ve appointed an international consultant to carry out a feasibility study on palm oil millers trapping greenhouse gas from palm oil mill effluent (POME) and converting it into energy,” MPOB chairman Datuk Sabri Ahmad said. “The consultant is expected to finalise the study in two months,” he told Business Times in a telephone interview.

In a separate interview, Bell Corp Sdn Bhd, which owns seven palm oil mills in the country, lent support to the government’s policy of reducing the reliance on depleting fossil fuels and using more renewable energy instead.

“It is possible for mill owners like us to trap methane from POME and pump it into gas engines to generate electricity and hook up to the national grid,” Bell chief executive Datin Liana Low said.

To date, one of Bell’s mills has been fitted with a biogas plant to extract methane from POME to generate 2 megawatts per hour (MW/h) of electricity for sale to Tenaga Nasional Bhd.

“By buying more green electricity from palm oil millers like us, the government can re-channel more natural gas for the export-driven manufacturing sector,” she said.

Prime Minister Datuk Seri Najib Razak said in his speech at the World Future Energy Summit in Abu Dhabi recently that Malaysia was looking at improving feed-in tariffs as part of efforts to promote production of renewable energy. Feed-in tariffs guarantee that energy generated through renewable resources is purchased by the national grid operator.

Can POME methane be fed into Gas Malaysia pipeline?

February 6, 2010 7 comments

Quite a bit have been written about burning biomass to generate electricity. Today, let’s explore a little bit on the potentials of biogas or more specifically, methane.

Palm oil millers are encouraged to capture methane from palm oil mill effluent (POME) to reduce air pollution. In turning this dirty gas into clean energy, palm oil millers running biogas plants have two theoretical choices:-

1. Methane is converted into electricity and fed into the power grid, owned by Tenaga Nasional Bhd (TNB).

or

2. Methane can be injected into the national gas pipeline, owned by Gas Malaysia Sdn Bhd.

Right now, TNB has feed-in tariffs for ‘green’ electricity. Gas Malaysia, however, do not. The sole supplier of natural gas into the national pipeline is Petroliam Nasional Bhd (Petronas) and the co-owners of Gas Malaysia are MMC-Shapadu Holdings, Tokyo Gas – Mitsui Holdings and Petronas Gas Bhd.

In Peninsular Malaysia, there is enough electricity in TNB’s grid but a shortage of natural gas in Gas Malaysia’s pipeline for manufacturers like oleochemical producers, rubber glovemakers, ceramics manufacturers and steel millers.

1. Should Gas Malaysia’s pipeline be open up to allow feed-in of methane captured from POME?
2. Are all owners of Gas Malaysia willing to buy ‘green’ gas from palm oil millers? If so, at what price?

It is said that gas is a better long-distance energy carrier than electricity. Storage of methane and transportation is much cheaper and easier than electricity. Natural gas pipelines cost half as much to build as electric towers and only experience one fourth as much transmission loss.

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5 per cent more gas for manufacturers

KUALA LUMPUR: The government is re-allocating 100 million standard cu ft per day (mmscfd) from independent power producers (IPPs) to the gas-hungry manufacturing sector. Gas supply shortage has been a major grouse among some industries since 2008.

Malaysian Industrial Development Authority (Mida) director-general Datuk Jalilah Baba said natural gas was in short supply while there was a growing demand from new manufacturers.

“Oleochemical and food industries would be given priority in considering the distribution, as these industries need gas for industrial processing,” she said, adding Mida was entrusted by the government to distribute the natural gas based on the companies’ needs.

She was speaking to reporters after Mida released its report on the performance of the manufacturing and services sectors 2009 here today. Also present was International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

State power firm TNB and independent power producers such as MMC Corp, Genting and YTL Power that pay RM10.72 per million British termal unit (mmBtu). The manufacturing sector pays much more. Companies using less than two million standard cu ft per day (mmscfd) pay RM24.54 per mmBtu of gas while those using more pay RM32.56 per mmBtu. Malaysia produced 2,146 mmscfd, according to Petroliam Nasional Bhd (Petronas) 2009 annual report.

Jalilah said new companies should not rely on gas alone but alternative energy. She added only existing companies working with Mida were eligible to seek gas supply under the allocation. She said gas would have to be imported in 2013 due to greater shortage of gas supply.

She said Petronas would continue to seek new gas fields to ensure there would be adequate supply for industries in the future. Petronas, she said, would buy two million tonnes of liquified natural gas per annum in a 20-year deal, starting 2014, with firms in Gladstone, Queensland in efforts to meet future domestic demand.

CPO price expected to do better in longer term

February 3, 2010 Leave a comment

CRUDE palm oil (CPO) price is likely to trade around RM2,500 a tonne, but could do better in the next few months, Malaysian Palm Oil Council (MPOC) chairman Datuk Lee Yeow Chor said.

“Cargo surveyors’ reports show that January exports are 20 per cent higher than in December. With the recent floods in Sabah, output is affected and the multiplier effect on palm oil prices can be significant. “Therefore, prices are not likely to slide further and should find strong support at RM2,400 per tonne,” he told reporters at an MPOC seminar in Subang Jaya, Selangor, yesterday.

“We’re now entering the low seasonal output months of February and March. As stock levels deplete, it is foreseeable that prices could trade at a higher band of between RM2,500 and RM2,700 per tonne towards the middle of the year.”

Yesterday, the third month benchmark palm oil futures traded on the Bursa Malaysia Derivatives market inched RM7 higher to close at RM2,452 a tonne.

Teoh Gim Meng, citing recent high stock levels published by the Malaysian Palm Oil Board, had a bearish outlook on palm oil prices in the short term.

A trader, analyst and broker with CIMB Group, Teoh said: “Last year saw a demand-driven market. But now, we see ample supply of vegetable oils in the global market. Argentina, Paraguay, Brazil and the US are experiencing record output of soyaoil.

“Prices could slide further and the next support level is at RM2,280 per tonne. If the downtrend persists, it could fall as low as between RM2,100 and RM2,150 per tonne. Don’t forget: last year, the RM2,100 level was tested twice.” On a longer term of four to six months, Teoh was just as hopeful as Lee that palm oil prices could rise to as high as RM2,700 a tonne.

Full B5 mandate implementation this year

February 3, 2010 Leave a comment

THE government has decided to revert to the original plan of implementing the B5 mandate this year following a high powered meeting yesterday. It had initially set January 1 as the deadline to sell B5 biodiesel, a mixture of 5 per cent palm oil and 95 per cent diesel, at all petrol stations nationwide.

Last Friday, there was indication that full implementation could be deferred to next year.

Biodiesel producers, who have invested hundreds of millions of ringgit to cater for captured demand for the renewable fuel, had lamented that the country was at the forefront of palm biodiesel technology but had yet to implement any mandate.

According to the Malaysian Palm Oil Board, biodiesel producers are capable of producing two milllion tonnes of the eco-friendly fuel a year. Implementation of the B5 mandate will lead to less use of depleting fossil fuel and help the transport sector reduce carbon dioxide emission.

“We take note of the industry’s feedback. Following my meeting with Prime Minister Datuk Seri Najib Razak this (yesterday) morning, we hope to go for the full B5 this year,” Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said.

He said the Cabinet still needed to decide if consumers would have to pay extra for B5. The fuel costs an additional 4-5 sen a litre, which is mainly the cost to transport and blend the mixture.

“Hopefully, we can stick to the B5 blend as the production of biodiesel will take up about 500,000 tonnes of palm oil, which is good given the current high palm oil stock level,” Dompok told reporters after officiating at a seminar in in Subang Jaya, Selangor. The seminar, titled “Reach & Teach Friends of the Industry: Challenges and Opportunities in 2010”, was organised by the Malaysian Palm Oil Council.

Dompok promised to re-submit the case for legality of the windfall tax to the Cabinet for consideration as currently, the tax is calculated on assumed rather than actual profits.

The Malaysian Estate Owners Association (MEOA), which represents small- and medium-sized estates of more than 40ha, argued that it would be more justified if the tax was on actual profits of audited financial accounts, like corporate tax. This is because not every planter makes a lot of money as profits depend on the age and productivity of the trees. A newly replanted estate, for instance, will still lose money even if palm oil prices surpass RM3,000 a tonne.

Planters in Peninsular Malaysia are required to pay the windfall tax when palm oil prices go beyond RM2,500 a tonne in the cash market. In Sabah and Sarawak, however, planters only need to pay the windfall tax if the price crosses RM3,000 a tonne.