Business

Tuesday June 19, 2012

Why did M'sia ship 12 tonnes of biomass to Italy?

Commodities Talk- by Hanim Adnan


LATE last month, Malaysia's first shipment of oil palm biomass made its way to Italy.

The objective is for preliminary analyses, testing and technology adaptation at a pilot plant there to verify whether the 12-tonne biomass comprising palm tree trunks, empty fruit bunches and fronds could be converted to non-edible industrial sugar for commercial-scale production.

It is also envisaged that the intellectual property gained from the impending success of the pilot test, would pave the way for Malaysia not only in the production of industrial sugar but also, the building blocks for other high-value biochemicals or “green chemicals”.

This noble initiative is spearheaded by the Malaysian Industry-Government Group for High Technology (MIGHT), an agency in the Prime Minister's Department in collaboration with Sime Darby Bhd and Felda Group. A special purpose vehicle (SPV) called MYBiomass Sdn Bhd has also been set up to manage the venture.

So, why indeed is there such a big interest by the Government in the biochemicals sector?

The answer lies on the growing trend worldwide of significant migration from biofuels to biochemicals given its huge market potential.

Furthermore, the global market for chemicals is pegged at a whopping RM7 trillion. Even MIGHT concurs that green chemicals offers the largest potential for Malaysia.

By taking a diverse portfolio approach, Malaysia can produce 1.6 million tonnes of bio-based chemicals with a market value of RM7bil to RM9bil annually - by simply optimising 5.5 million tonnes of the estimated 80 million tonnes of abundant supply of oil palm biomass nationwide.

Therefore, the venture between MIGHT, Felda and Sime Darby to exploit the prospects of converting oil palm biomass into industrial sugar, represents a landmark deal that would likely position Malaysia to be a world producer of green chemicals. If feasible, MYBiomass is said to require 60,000 tonnes of palm-based biomass feedstock to produce 1.2 million tonnes of industrial sugar a day.

In Thailand, tapioca has been converted to sugar, while Brazil and the United States have also converted corn to ethanol.

For Malaysia, many quarters believe that the industrial sugar to be produced from oil palm biomass would likely be supplied to the oleochemicals, paints and chemicals industries, with ready players such as Petronas Chemicals, Badische Anilin-und Soda-Fabrik, British Petroleum, Archer Daniels Midland and DuPont.

Meanwhile, the quest to identify more attractive biochemicals-related ventures for Malaysia goes on.

To fulfil the prospects of producing 1.6 million tonnes of biochemicals, Malaysia is expected to require some 10 to 20 bio-based chemical plants, with an estimated total investment scaling of between RM10bil and RM15bil.

There is no doubt that the Government would be able to provide the policy and incentives, but the investments for such highly-capitalised ventures would ultimately be driven by the private sector.

  • Deputy news editor Hanim Adnan salutes the oil palm tree as it challenges the proverb that says money doesn't grow on trees

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