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Siti Safura Masiron


The Star Online



Palm oil players encouraged to diversify into downstream sectors

10.08.2018 (The Star Online) - BINTULU: Local palm oil players are strongly encouraged to diversify into further downstream sectors such as oleo derivatives and specialty oleochemical-related ventures like the production of high-value oleochemical derivatives, second-generation bio-fuels for power generation, and food and health products as a way forward.

“The waste to wealth to health pathway is the way forward in promoting our clean environment. The industry should therefore move forward in maximising its potential to generate wealth and contribute towards promoting the environment-friendly image of the industry.

“There are many areas for strategic growth of the oil palm industry that have the potential to create value, be it through improving productivity or downstream value addition,” said Deputy Chief Minister and Minister of Modernisation of Agriculture, Native Land and Regional Development Datuk Amar Douglas Uggah Embas.

Bintulu, he pointed out, being located half way between Kuching and Kota Kinabalu is a strategic location for investment in both petrochemical and oleochemical plants as it already has the advantage of producing the raw materials such as natural gas as a feedstock for ethylene and palm kernel oil for the manufacture of surfactants.

Speaking at the opening of the 9th Malaysia International Palm Oil and Agriculture Equipment Technology Conference and Borneo International Oil and Gas Energy Expo 2018 at Bintulu Civic Centre yesterday, he said currently, there are 20 oleochemical plants in Malaysia.

He said there is a need to establish one or two in East Malaysia because more than 50 per cent of oil palm planted area is in the states of Sarawak and Sabah.

“With the establishment of these oleochemical plants, I strongly believe that the downstream activities will continue to contribute significantly to the national economic growth by creating economic activities and employment opportunities in the state,” said Uggah.

On the milling sector, he said currently, there are 80 palm mills in operation with annual capacity of 21.69 million tonnes of fresh fruit bunches (FFB) with an average utilisation of 95.4 per cent.

For the past five years, Uggah said the oil extraction rate (OER) by these mills ranged from 19.98 per cent to 20.43 per cent, whereas it used to be 21 per cent to 22 per cent ten or twenty years before, and that was when the country recorded the highest OER.

“A mill of 45 tonnes per hour, running at full capacity and a drop of one per cent in OER with an average of crude palm oil (CPO) of RM2,150.50 per tonne will incur losses of about RM5.81 million per annum.

“Therefore, it is pertinent that millers improve their OER by only accepting good quality FFB as well as adopting good milling practices which minimise oil losses in the milling process and to recover as much residual oil,” he said, adding that in the long term, the milling sector needs to constantly improve its operation efficiency and good practices in order to become highly efficient, competitive and sustainable.

In terms of sustainability, in 2017, the milling sector in Sarawak had processed 20.69 million tonnes of FFB, generated 13.86 million tonnes of palm oil mill effluents (POME) and 4.47 million tonnes of empty fruit bunches (EFB) which could be used as biomass feed stock, he added.

As a matter of policy and best practice, he said POME undergo the process of residue oil removal as well as anaerobic treatment to reduce biochemical oxygen demand (BOD) to 50 parts per million (ppm) to comply with the state’s stringent environment quality regulations.

The millers, he added, must also think outside the box on how to convert these effluents, EFB and other residues that are generated by the mills into value-added products.