KUCHING: Jaya Tiasa Holdings Bhd plans to invest some RM70mil in a fourth palm oil mill project to cope with increasing fresh fruit bunches (FFBs) production from the group’s expanding plantations.
The group’s third palm oil mill with a designed capacity of 120 tonnes per hour is scheduled to be commissioned by next month, according to Jaya Tiasa chairman Tan Sri Abdul Rahman Abdul Hamid.
He said the two existing mills with combined processing capacity of 150 tonnes per hour produced some 69,000 tonnes of crude palm oil (CPO) and 11,000 tonnes of palm kernel in the financial year ended June 30, 2014 (FY14).
According to Jaya Tiasa, by-products from its palm oil mills, such as mesocarp fibre and palm kernel shells, were utilised as feedstocks for power generation for the mills while empty fruit bunches were recycled for application as mulch in its plantations.
The company has installed a compositing plant to turn the empty fruit bunches and palm oil mill effluents into bio-organic fertilisers.
As of June this year, the group’s total planted areas stood at 65,681ha in more than 10 plantations representing 94% of the estimated plantable area of 69,873ha. With 55,438ha (84%) having matured, the group’s FFB production rose by 15% to 766,469 tonnes from 666,899 tonnes in FY13.
Matured oil palm area increased to 55,438ha from 48,005ha year-on-year, said Abdul Rahman in the newly-released Jaya Tiasa’s 2014 annual report.
“The average age of the palm trees is relatively young with only 23% of the planted areas (14,918ha) in their prime. As at June 30, the weighted average of our palm age is still below six years. We expect our FFB yield per hectare to continue to improve and consequently reduce our cost of production,” he added.
Abdul Rahman said to better cope with labour shortage, the group had increased farm mechanisation to optimise the deployment of workers.
Jaya Tiasa’s oil palm business achieved a marked turnaround to record a pre-tax profit of RM33mil in FY14 from a pre-tax loss of RM2mil in FY13. The group registered a 5% increase in average selling price of FFBs while average CPO price remained stable at RM2,400 per tonne.
Jaya Tiasa’s traditional core business is in logging and manufacturing of timber products, like plywood. The company has one of the largest timber assets among Malaysian listed companies, and it owns forest concession area of more than 713,200ha, with monthly extraction quota of 92,000 cu m.
Abdul Rahman said the group’s log production volume dipped by 0.8% to 1.05 million cu m from FY13 due to unfavourable weather, the impoundment of the Bakun hydroelectric dam, which had continued to impede the transportation of logs for processing mills and exports, as well as supply chain issues which had made logging operations a bigger challenge.
Total log sales declined sharply to 522,188 cu m from 696,607 cu m. About 62% of the group’s log exports went to India, followed by Taiwan.
“To better manage our forest, we will select good quality species with high market value for harvesting. We shall maintain our strategy to export all available logs within the permitted quota and maintain vagilant control on the cost of production.
“Increased attention will also be given to logistical planning to ensure that logs extracted are delivered within the shortest time frame possible to preserve their freshness and maintain their quality for premium prices,” he added.
In FY14, the timber division contributed 69% to group revenue of RM1.03bil and 62% to group pre-tax profit of RM80mil.
On reforestation, Abdul Rahman said the group was currently managing nearly 236,000ha of planted forest, adding that it was committed to expand the area to keep with the world’s move of conservation of natural forests.
On prospects going forward, Abdul Rahman said log prices were expected to remain firm in view of restricted supply and robust demand from the importing countries.
He said as the group’ palm trees had a relatively young age profile, FFB yield would improve significantly as more trees matured to their prime.
“Additional CPO mill will boost our CPO production while expanding vertical integration should contribute positive to the palm oil division in the next financial year,” he added.