FGV to work with Chinese firm to turn empty fruit bunches into paper

FGV wants to use technology to convert empty fruit bunches (EFB), from oil palm processing, into paper pulp for commercialisation.

KUALA LUMPUR:

FGV Holdings Bhd (FGV) has signed a memorandum of understanding with China Machinery Engineering Corporation (CMEC) to explore the feasibility of a joint venture to establish paper pulp production facilities as well as potential distribution and commercialisation of the paper pulp business to the global market.

CMEC’s core business is engineering contracting, specialising in the construction of power projects, trading, investment, research and development and international services.

The company is currently listed on the Hong Kong Stock Exchange with a current market capitalisation of HK$15.88 billion (about RM8.58 billion).

It collaborates with research institutes in Hangzhou and Guangxi. It wants to use technology to convert empty fruit bunches (EFB) into paper pulp for commercialisation.

EFB is what remains of the fresh fruit bunches after the fruit has been removed for oil pressing.

FGV interim group president and CEO Azhar Abdul Hamid said given the volatility of CPO prices, this initiative was in line with the company’s strategy to focus on downstream activities.

It will help to ensure that the by-products from existing operations are fully utilised to create value for the group.

“FGV produces 3.47 million tonnes of EFB per year from its 68 mills all over Malaysia.

“This green project also aligns with our waste-to-wealth initiative in order to ensure the operations are more sustainable,” Azhar said in a statement.

He said with this MoU, FGV hoped to explore the opportunity to integrate the operations of its existing mills with CMEC’s engineering expertise and to establish the paper pulp production facilities with an initial capacity of 50,000 tonnes per annum.

Furthermore, FGV could leverage CMEC’s extensive engineering and domestic knowledge on China’s pulp market, he said.

“Public awareness on the use of green and sustainable products such as paper pulp is increasing every year.

“This is a great business potential for FGV to explore as we leverage on the huge raw material source to our competitive advantage,” Azhar added.

China’s pulp and paper industry has been growing at an exponential pace, registering growth of 182.3% from 2006 to 2016.

This is in line with the republic’s import volume of paper pulp between 2009 and 2017 which showed a growth of 73.4%, with 23.72 million tonnes imported in 2017.

Given the pulp price per tonne of close to US$900, FGV expects to capitalise on China’s demand for paper.

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FGV to work with Chinese firm to turn empty fruit bunches into paper

MoU signed to explore feasibility of a joint venture to establish paper pulp production facilities using 3.47 million tonnes of EFB produced every year from FGV mills.