Hong Seng looking into Mitsui Group tie-up

Caption Prime Minister Datuk Seri Ismail Sabri Yaakob withnessing MOU of Hong Seng Consolidated Bhd and Mitsui & Co (Malaysia) Sdn Bhd after official launch of NCER strategic project Kedah Rubber City (KRC) at Mukim Padang Terap Kiri, Padang Terap in Kuala Nerang, Kedah. ( February 7 , 2022 ). — CHAN BOON KAI/The Star

PETALING JAYA: Hong Seng Consolidated Bhd is exploring a collaboration with Japanese conglomerate Mitsui Group in the nitrile butadiene latex (NBL) manufacturing and tank farm integrated logistics services businesses.

The group told the stock exchange yesterday that it had accepted a letter of intent (LoI) from Mitsui & Co (M) Sdn Bhd to begin negotiations on the partnership.

The collaboration will focus on Hong Seng’s NBL manufacturing business in Kedah Rubber City and its tank farm integrated logistics services business in Penang.

According to the LoI, Mitsui expressed its intention to provide one-stop supply chain management for the feedstock and raw materials of Hong Seng’s NBL plant, as well as finance and provide raw materials for the tank farm established by Hong Seng’s fully owned subsidiary HS Petchem Sdn Bhd.

Yesterday, Hong Seng and Mitsui exchanged documents during the official launch of Kedah Rubber City, witnessed by Prime Minister Datuk Seri Ismail Sabri Yaakob, Kedah Mentri Besar Datuk Seri Muhammad Sanusi Md Nor and Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed.

Through the partnership, Hong Seng group managing director Datuk Seri Teoh Hai Hin said the group will be able to contribute to the nation in terms of knowledge sharing and new technology transfers to be acquired during the course of the project.

This will position Malaysia into becoming the hub for nitrile latex total supply chain from upstream to downstream, incorporating advanced technologies and world-class standards.

“We will be developing our RM3bil NBL project here (in Kedah Rubber City), which is poised to position Hong Seng as the first public-listed and large-scale nitrile raw material producer in Malaysia.

“Thus, the strategic partnership that we will form with Mitsui will enable us to leverage on the expertise and global network of Mitsui in the chemical supply industry, while helping to strengthen Mitsui’s market in Malaysia,” he said.

Hong Seng pointed out that due to the rise in demand for nitrile gloves, the raw materials needed are also experiencing severe shortages.

By setting up its own feedstock tank farm facilities, Hong Seng aims to capture a substantial market share and fill a void in the supply chain.

The construction of Hong Seng’s tank farm in Penang is expected to be completed within 18 months, in sync with the production commencement of the NBL project.

On June 25, 2021, Hong Seng’s wholly owned subsidiary Hong Seng Industries Sdn Bhd entered into a sublease agreement with the Northern Corridor Implementation Authority for a sublease of an industrial land located at Kedah Rubber City.

The group plans to build an NBL manufacturing plant which will be completed over four phases, with a full production capacity of 960 kilo-tonnes per annum (KTPA).

The first phase of 240 KTPA is expected to commence commercial production by the second quarter of 2024.

Meanwhile, on Nov 1, 2021, HS Petchem accepted the letter of offer issued by Penang Port Sdn Bhd for the sub-lease of a part of an industrial land located at Prai Bulk Cargo Terminal, Penang.

The group plans to construct a tank farm for the feedstock storage and supply of butadiene and acrylonitrile petrochemicals, as well as provisioning of logistics services for the delivery of the feedstock.