New plantations to drive demand for palm oil mills

PETALING JAYA: CB Industrial Product Holding Bhd (CBIP) expects its business of designing and building palm oil mills to grow by 50% next year.

Managing director Lim Chai Beng said the current order book for its palm oil mills, which use the cost-efficient Continuous Sterilisation System (CSS), was about RM350mil.

He said there was a huge demand for its palm oil mills due to the opening of new plantations in Malaysia and overseas.

“The group has invested RM20mil over the last eight years to develop the CSS and now we want to focus on selling the products,” he told StarBiz.

“With the overwhelming response from the three largest plantation companies in the world, we expect our order book to increase by 50% next year.”

Lim said he was bullish on the growth prospects in Indonesia, the world’s largest palm oil producer, as the company only had a handful of clients there at present.

CSS, which uses atmospheric pressure to process the fresh fruit bunches (FFB) in a continuous sterilisation chamber, is more cost-efficient and safe compared with conventional mills, which use high pressure. It also requires a smaller area, less manpower and less maintenance.

CBIP’s unit ModiPalm Engineering Sdn Bhd holds the CSS patent, which was registered in Malaysia and Indonesia, until 2019.

ModiPalm clients include domestic firms as well as companies in Indonesia, Thailand, West Africa, Colombia, Ivory Coast and Papua New Guinea.

Its biggest client is the Federal Land Development Authority, followed by Indonesia’s PT Astra Agro Lestari. Others include Tabung Haji Group, Tradewinds Plantation Bhd, Sarawak Oil Palms Bhd, Sinar Mas Group and Makin Group.

ModiPalm is starting to build mills for its own operations, either through joint ventures with plantation owners or 100% owned ventures.

“This year we will complete two mills, followed by two more mills next year and one mill each ensuing year,” Lim said.

“In addition, our very first zero-discharge palm oil mill operated by Sachiew Plantation Sdn Bhd and using ModiPalm’s technology is expected to be commissioned next month.

“This mill should also help to boost the company’s earnings via cost-effectiveness and sale of carbon credits,” he said, adding that PT Astra Agro Lestari was using ModiPalm’s technology to build “green” mills that resulted in zero-waste.

On its oil palm plantation business, Lim said the group was targeting to expand its land bank overseas.

“Local land bank is getting more expensive and funding more difficult to get. Maybe if crude palm oil (CPO) price continues its downward trend for a long time, it will present us an opportunity to acquire more land.

“But bear in mind that there are many companies far more cash-rich than us. Thus, we are expanding overseas,” he said.

Currently, CBIP has 14,500ha of fully planted and matured oil palm plantation land.

Lim said that with the current CPO price, the profit margin for a tonne of FFB was about 30%, while the profit margin for mills was quite attractive. Third-month CPO contract closed RM17 higher at RM1,626 yesterday.

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