Malaysia Global Bioenergy plans 2nd biodiesel plant

Singapore, Mar 20: Malaysian biodiesel producer Global Bioenergy Resources Sdn. Bhd. plans to build a 100,000 tonnes per year (tpy) biodiesel plant, before its first facility starts commercial production, a company source said on Tuesday.

The bigger plant, which will be built despite forecasts for higher palm oil prices this year, will be a joint venture with foreign investors, the source said, without elaborating.

''The site for the plant has been acquired,'' said the source who declined to be named.

The palm-based plant in Kuantan, on the east coast of peninsula Malaysia, will cost 80 million ringgit (.8 million) and is due for completion around the fourth quarter of this year and could double its capacity to 200,000 tpy, the source added.

The firm's 30,000-tpy plant located in West Port at Port Klang on the west coast, has started running early this year after it was delayed by mechanical problems, but has yet to produce biodiesel for the market. [ID:nSIN138181] The smaller plant is currently running tests to meet European biodiesel standards. ''We were actually testing the market due to limited resources, that is why we started with the modular plant,'' he said.

Palm oil prices are set to rise more than 20 percent by the year-end as global oilseed stocks are run down and demand from the food and fuel sectors jumps, industry officials said at a price outlook conference in Malaysia last week.

But Global Bioenergy, which has no palm oil plantations, is confident the venture would yield profits as supplies remain ample and that prices would fall.

''There is not enough biodiesel plants in Malaysia to utilise the excess feedstock. Nothing has changed, the hype was created by the market,'' the source said.

Palm oil prices traded around 5 a tonne, about 40 percent higher than the same time last year, while crude oil prices stood at 5 a tonne, about 27 percent below July's record high.

''We may not be getting fatter profits but (palm oil) is still cheaper than rapeseed,'' he added.

Malaysia, the world's largest producer and exporter of palm oil, already has four other biodiesel plants in operation.

Reuters