Business

Friday November 14, 2008

Carotech secures RM200m biodiesel contract


KUALA LUMPUR: Carotech Bhd, one of the largest local producers of palm methyl ester, has inked a RM200mil contract with Trafigura Beheer BV, Amsterdam for the export of its refined and distilled palm biodiesel to the US and Europe.

Managing director David Ho expected the agreement to contribute significantly to the company’s earnings and further strenghen its position as the leading supplier of palm biodiesel in the world.

“Trafigura has been our customer since 2007 and this agreement is important to us as it would take up more than 50% of our capacity and provide certainty to our operations, bankers and suppliers,” he told reporters after the agreement signing ceremony yesterday.

At present, Carotech operates two production facilities in Perak which produce more than 120,000 tonnes of biodiesel per year.

Left to right : Trafigura Beheer BV, Amsterdam representative Nicolas Chiche, Deputy Minister of Plantation, Industries & Commodities YB Senator A.Kohilan Pillay and Carotech Bhd MD David Ho at the signing ceremony on Wednesday.

Under the agreement, Ipoh-based Carotech will supply Trafigura with 60,000-84,000 tonnes of its CaroDiesel biodiesel annually or 5,000-7,000 tonnes monthly, at a price based on a formula at a premium over the crude palm oil price.

The one-year contract would begin in January, said Ho.

Based in Switzerland, Trafigura is the world’s third largest independent oil trader and second largest independent trader in the non-ferrous concentrates market.

In the oil sector, the company has access to over 30 million barrels of storage facilities through a combination of owned terminals under its network and long-term lease agreements with third party oil terminals.

Ho said while the biodiesel industry will face tougher challenges in 2009, its outlook was still bright with the European Parliament reaffirming binding targets of 5% for biofuels in transport by 2015 and thereafter increasing it to 10% by 2020.

“Failure to meet these interim targets for renewable energy will result in penalties,” Ho said, adding that the US market for biodiesel was also growing at a rate of 25 million gallons per year in 2004 and 2005 to 450 million gallons in 2007.


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