Biomass Fuel Production Project in Malaysia

November 24, 2009

ITOCHU Corporation ("ITOCHU") and FELDA Palm Industries Sdn.Bhd. ("FPI"), one of the world’s largest palm oil producers, have agreed to establish a new joint venture company ("JVCo") producing solid biomass fuel in Malaysia.

The JVCo will construct a new plant producing EFB pellets made from empty fruit bunches ("EFB") in Johor, Malaysia. EFB pellets are innovative biomass fuel representing the effective use of EFB. They do not conflict with use for food or other purposes. ITOCHU and FPI plan to expand annual production to more than 120,000MT in the future.

The EFB pellets manufactured by JVCo will be delivered to a Japanese power company through ITOCHU, based on an agreement already concluded. This is the first significant example of the delivery of EFB pellets for industrial boiler fuel anywhere in the world.

Reducing greenhouse gas emissions has become a global imperative, and demand for biomass fuel is rising worldwide. In Japan, the Renewable Portfolio standard came into force in April 2003, and power companies are now obliged to use a certain amount of renewable energy, such as biomass fuel, in line with the law. Japanese power companies have consequently begun to use biomass fuel in place of coal in their power plants. ITOCHU believes that the market for biomass fuel is promising and is focusing on this area as an environmental friendly business.

  • Empty Fruit Bunch (EFB)
    EFB is the residue produced when palm fruit is taken from a fresh fruit bunch in the initial process of palm oil production. The volume of EFB produced is almost the same as that of palm oil.

JVCo Profile

Company name FNI Biofuel Sdn. Bhd.
Description of business Production and sales of biomass fuel
Location of head office Kuala Lumpur, Malaysia
Location of factory State of Johor, Malaysia
Capital RM 6.5 million (JPY 150 million)
Capital structure FPI: 59%, ITOCHU:41%
Production capacity 24,000 ton/year
Beginning of operation Fall, 2010

FPI Profile

Company name FELDA Palm Industries Sdn. Bhd.
Description of business Production and sales of palm oil
Location of head office Kuala Lumpur, Malaysia

Chairman of the Board: Tan Sri Dr Mohd Yusof Noor

CEO: Abdul Halim Ahmad

Sales RM 10,330 million (JPY 258 billion)
Capital RM 202 million (JPY 5 billion)
Shareholder composition

Felda Holdings Bhd 72%

Koperasi permodalan Felda 28%

Palm oil production 3,130,000 tons (8% of world production and 18% of domestic production in Malaysia in 2008)
FPI owns more than 70 palm oil mills in Malaysia.
EFB generation 3,250,000 ton (estimation of 2008)