Conference on Green Tech for SMEs

in Palm Oil & Palm Biomass

Lenn Gomes Business Development POIC Sabah Sdn Bhd

Market Outlook for Downstream Industries

using Palm Biomass

28th July, 2011

Sandakan Community Hall

Sabah

Presentation Outline

• Major Oil Palm Biomass & Sources• Outlook for Biomass from Plantations (Fronds, Trunks)• Outlook for Biomass from Mills (POME, EFB)• Outlook for Biomass from Palm Kernel Crusher (PKS)• Summary & Conclusions

Fronds

Trunks

FFB

Pla

ntat

ion

Oil Palm Mill

Palm Kernel

Palm Kernel Crushing Plant

POME

EFB

PKS

PKC

Mesocarp Fibre

Major Oil Palm Biomass and Sources

Traditional Use of Palm Fronds

Throw on the ground

“Fertiliser”

MARDI’s approach…

Ingenierios Analpes Ltda: Cable Transport System

Some Details of MARDI’s Animal Feed Business

• Animal feed from oil palm fronds for ruminants at Felda Bukit Sagu, Kuantan, set up in July 2008

• Pellets manufactured using technology from Japan and Germany

• Factory was erected on 1.5 hectares of land at a cost of RM14.1 mil

• Capacity 1,200 tonnes per shift per month; 3 shifts/day; 13 workers

• Price: Blended - RM30/40 kg bag; non-blended - RM17/40kg bag

• Palm fronds: RM65/tonne

World Meat Consumption

103 119 132

97

171

227

0

50

100

150

200

250

300

350

400

1995 2015 2030

Industralised Developing

Mill

ion

tonn

es

Source: FAO (From International Feed Industry Federation Website)

Global Meat Market Demand Growth

450

400

350

300

250

200

150

100

50

1980 1990 2000 2010 2020 2030

+ 32%

+ 33%

+ 24%

+ 19%

+ 16%

Source: Kennes (Rabobank), 2010

World Grain Consumption

0.0

0.3

0.6

0.9

1.2

1.5

Food Animal Feed & Other Uses

B il l io n T o n n e s

60 %45 %

Billion TonnesBillion Tonnes 1965 1996 2030F

Source: FAO

Projected world growth in demand for animal feed

Source: FAO

Other Market Opportunities for OPF

• Organic Fertiliser• Pulp & Paper• Biofuel• MDF/Particle board

Biomass from Plantations: Oil Palm TrunksPlantation

Trunks

Replanting

Plywood

* Located in Kedah and Johor* 28.5 ha of manufacturing facilities and storage plant

* Located in Penang* High quality 9mm, 12mm, 15mm & 18mm OPT plywood

Engineered Lumber

Engineered Lumber Applications

Conversion Rate for Engineered Lumber Manufacture

2.1 Oil palm trees1 m3 MyScrimTM Lumber

Raw Materials Requirements for a Factory

Assumptions:

a) An OPT volume = 1.11 cubic meter

b) 85 % of the OPT is used

c) 100 % compression

d) 136 OPT per ha

From FRIM

• One cubic meter of MYScrim-OPT requires 2.1 OPTs.

• Factory capacity 110,000 m3 of MYScrim-OPT per year requires only 234,000 OPT

• Plantation acreage required: 1,720 ha

Medium Density Fibreboard (MDF)

Amount of oil palm biomass required per m 3 of MDF (750 kg)

Source of oil palm biomass Amount of green (wet) oil palm biomass required

EFB 3.58 tonnes

OPF 4.59 tonnes

OPT 5.67 tonnes

• MDF consumption forecast to grow at an annual average rate of around 5 per cent from 2009 to 2013

• By 2013, North Asia will be producing 45 per cent of the world’s MDF

• China alone will be producing 41 per cent

• 2010 – 2013 prices expected to increase by 6 to 7 per cent annually

Historical & Projected Tropical Plywood Prices*1000

900

800

700

600

500

400

300

200

100

0

1995 2000 2005 2010 2015 2020

*Data source: ITTO, 2009

Non-tropical hardwood plywoodTropical hardwood plywoodSoftwood plywood

US

$ pe

r m

3

Malaysian plywood prices (July, 2011)

2.7mm: $441-5023 mm: $422-452

Production costs:

$370-400

Source: ITTO

Housing Industry Recovery in Key Regions – N America

House Price Growth in Europe

Source: RICS, 2011

Housing Industry Recovery in Key Regions – Europe

Asia-Pacific Demand Trends

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

2000

1800

1600

1400

1200

1000

800

600

400

200

0

Paper & paperboardWood pulpParticleboard & fibreboardSawnwood & plywoodOther industrial roundwood

Mill

ion

m3

Source: FAO, 2009

Biomass From Mills: POME, EFB, Mesocarp Fibre

POME

EFB

Mesocarp Fibre

Palm Oil Mill Effluent (POME)

Boustead EFB/POME Organic Fertiliser

30,000 tonnes EFB/yr; 90,000 tonnes POME/yr

Net: 15,000 tonnes of organic fertiliser/yrPayback period (10%): 5 years

Nutrient Concentration (% dry matter)pH

Ash N P K Ca Mg C

10.7-11.6

1.23 -1.24

0.16 -0.17

1.54 -2.55

0.52 -0.53

0.28 -0.33

45.41 -45.93

5.91-7.31

Regional Share of Fertiliser Consumption 2007/8-2011/12

Source: FAO

Region N,P,K 2007/08 2008/09 2009/10 2010/11 2011/12

World Fertiliser Supply-Demand Balance (‘000 tonnes)

Empty Fruit Bunch (EFB)

Best to Process EFB First – at Mill

• Szetech Engineering

• MSHK Engineering• Muar Ban Lee• YKL

• Sawipac• MVance

Facilitates handling and transportation

Specs of Oil Palm Fibre from CM Fibre Processing Sdn Bhd• Length of Fibre : 76mm - 250mm

• Impurity level: 6% • Moisture content in fibre : 15% - 18%• Oil content : 2.8-3.5%

• Fibre content in Empty bunch : 23% - 25%

Just a Step or Two from Value Adding

Mattress Filling

Ecomat

Solid Fuel: Pellets/Briquettes

Pellets vs. BriquettesBriquettes Pellets

Less power consumption – less grinding & pressing

Requires large power-consuming hammermills

Requires expensive after-coolers, dust collection systems & drum-type drying systems

Can be made of a variety of materials (wood, agricultural residue, paper, mixtures of feedstocks) & come in various sizes

Using dust fines to make pellets risks explosions, fires, & respiratory problems

Lower repair and maintenance costs and faster start-up times

Can have much higher moisture content –up to 15%

Have 15 times surface area for same weight of briquettes – moisture uptake reduces calorific value and increases shipping weight

Export Potential

Source: renewableenergyworld.com

Europe & North America accounted for 97% of global demand

Global demand for briquettes & pellets: 12 million tonnes in 2008

EU: Biomass generating capacity: 10,000 MW by 2013

North America: Coal-fired power plants capacity: 360,000 MW

Example: Income for Palm Oil Mills

Ex-mill price for palm briquette: US$50-60 per tonne

Annual income: US$2,160,000 – 2,592,000

Source:

(Renewable) PackagingFluting

415

420

425

430

435

12/21

/201

0

12/28

/201

0

1/4/

2011

1/11

/2011

1/18

/2011

1/25

/2011

2/1/

2011

2/8/

2011

2/15

/2011

Recent Price Trend of RB Fluting in Europe

Eur

os/to

nne

Source: FOEX, 2011Cost of production of unbleached fluting medium paper from palm EFB fiber is ~ US$220 to US$250/tonne

Source: Leong, ICOPB 2010

19/7/2011: 478 Euros/tonne

• 2009 Social Venture Network (SVN) Innovation Award• 2008 (Very prestigious) DuPont Award: Packaging

Innovation• 2007

– Produce Marketing Association (PMA): Impact Award for Sustainability

– GLOBE award: Technology Innovation and Application

Earth Cycle Packaging

Shannon Boase

President

• Molded fiber packaging

• Natural: free of bleach, dyes and chemicals

• Certified home compostable and renewable

• Recyclable

• FDA and CFIA Certified, Food Grade Packaging

• Water and grease resistant

• Microwavable

Wal-Mart, Wegman’s, Trader Joe’s, Publix, Kroger, Whole Foods, Loblaw’s & Sobey’s

Product Features

Major Customers

Global packaging consumption by materials, 2003-09

0

50

100

150

200

250

Other Glass Metal Flexibleplastics

Rigidplastics

Paper andboard

-40%

-20%

0%

20%

40%

60%

2003 2009 Growth

US

$ bi

llion

s

Source: World Packaging Organisation

Global Market Packaging Forecast

88

170

429

530

0

100

200

300

400

500

600

2009 2010 2011 2012 2013 2014

Sustainable Packaging Total Packaging

US

$ bi

llion

s

Source: Pike Research, 2009

Packaging growth: 23.5 % Sustainable packaging growth: 93 %

20 %

32 %

Wood Plastic Composite (WPC)

Polyethylene Pellets Pulverised fibre

Wood-Plastic Composite Pellets

Source: FPL

Source: Strandex Corp

Examples of WPC Products

WPC Application in Mercedes Benz “E” Class

20% weight saving achieved with fibre thermoset door panels

Source: Suddell, 2003

Global WPC Industry Highlights

• Projected to advance 10.5% per year to $2.4 billion in 2013

• Demand drivers:– long life spans; low maintenance– resistance to insects and exposure to the elements

– can be cut and hewn like natural wood– environmentally friendly

170215

800

0

200

400

600

800

USA China Europe

215

300

400

0

100

200

300

400

2009 2010 2011

Major Producers (2009)

Tho

usan

d to

nnes

China Production

Tho

usan

d to

nnes

0

400

800

1200

2009 2013

1200

800

400

2009 2013

US Production

Tho

usan

d to

nnes

Source: Fredonia

* SPF (Spruce-Pine-Fir)

US W-SPF* & Composite Lumber Price Forecast

1 Mbf (thousand board feet) ~ 2.4 m3

Biomass From Palm Kernel Shell (PKS)

Oil Palm Mill

Palm Kernel

Palm Kernel Crushing Plant

PKS

1 gram of AC has a surface area of between 500 and 1500 m2

Activated Carbon

Common Applications of Activated Carbon

• Water purification• Air filters in gas masks and respirators• Gas purification• Gold purification• Metal extraction• Medicine• Sewage treatment• Filters in compressed air

Global Activated Carbon Industry Highlights• Global demand to expand 9.9% annually through 2014 to

1.7 million tonnes

• US represents the largest national market with 15% growth through 2014 to 690,000 tonnes– Main driver: new EPA emission standards

• China growth projected at 10% through 2014– Main driver: economic growth

• Major players:– CECA Specialty Chemicals (France), Calgon Carbon Corp.

(US), Clarimex SA de CV (Mexico), Haycarb Ltd. (Sri Lanka), Kuraray Chemical Co. Ltd. (Japan), MeadWestvaco Corp. (US), NORIT Americas Inc. (US), Osaka Gas Chemicals Co. Ltd. (Japan), PICA (France)

Biomass from one hectare of OP Plantation

• Felled palm trunk once every 25 years dry weight = 74.5 kg

• Palm fronds– from felling; dry weight = 14.5 kg– from pruning; dry weight = 10.4 kg

• FFB = 20 tonnes; dry weight = 10.6 tonnes

• EFB = 4.6 tonnes; dry weight = 1.6 tonnes

• Fibre (12-13% of FFB); dry weight = 1.4 tonnes• Shell (6% of FFB); dry weight = 1 tonne

• Effluent (60% of FFB); Biogas 2.8 m3/ tonne of effluent

Malaysia OP plantation area: 4.7 million ha Sabah OP plantation area: 1.4 million ha

Fuel

Pulp & Paper Activated

Carbon

Fertiliser

Wood Panel Products

Wood Plastic Composites

Food

Animal Feed

Summary of Commercial Opportunities for Oil Palm Biomass

Many thanksLenn Gomes

Business Development POIC Sabah Sdn Bhd