INTERVIEW: Vance builds new Johor biodiesel unit

26 January 2007 10:02  [Source: ICIS news]

By Keith Tan Liming

 

SINGAPORE (ICIS news)--Vance Bioenergy is constructing a 100,000 tonne/year biodiesel unit in Malaysia, which is scheduled to come on stream in the third quarter of 2007, a senior company official said on Friday.

 

The completion of the unit will treble the Singapore company’s total palm methyl ester capacity to 150,000 tonnes/year, adding on to its current 50,000 tonne/year unit, Vance’s managing director Long Tian Ching told ICIS news.

 

Both units are located in Pasir Gudang, Johor state, an industrial and port town where several biodiesel producers and palm oil refineries are based.

 

The company currently exports predominantly to Europe and America, Long said, adding that its 500 tonnes/month crude glycerine by-product is sold mainly to Asian buyers.

 

He said that the current lack of industrial standards for the use of biodiesel as an automotive fuel in countries like China and Japan makes it hard for the product to become widely used by end-users unfamiliar with it.

 

“Governments have to take the lead in promoting it and that includes establishing an industrial standard such as EN 14214 and ASTM 6751. Most importantly, governments have to provide incentives, tax breaks and even mandatory requirements to ensure its take-up,” he said.

 

“Otherwise, the interest in biodiesel would rise and ebb only with the price of crude oil, which is not desirable because it does not provide a sustainable platform for producers and end-users,” he added.

 

Long declined to disclose the cost of the project, but said that typical standalone units have cost around $20m.

 

Given that Vance’s expansion comes at a period of volatile crude oil prices and rising cost of crude palm oil and methanol feedstocks, Long was optimistic that the company would remain competitive given its position as one of the regional frontrunners in large scale biodiesel production.

 

Future expansions would be dependent on market conditions, Long said, adding that the company looks at the situation opportunistically.  

 

Prices of refined, bleached, deodorised palm oil (RBD) were firm at $570/tonne FOB (free on board) Malaysia while methanol prices were largely stable at $475-485/tonne CFR (cost and freight) southeast Asia.

 

Crude palm oil front month futures were trading on the Malaysian Palm Oil Board at ringgit (M$)1,919/tonne ($548/tonne). February crude futures hit a high of M$1,950/tonne in mid-January amid flooding in large parts of Malaysia.

 

($1 = M$3.5)

 

Anu Agarwal contributed to this article.

By: Keith Tan Liming
+65 6780 4359

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