Palm | Kelapa Sawit

Carotech plans to triple biodiesel output
by Reuters

Carotech Bhd plans to more than triple its bio-diesel production to 125,000 tonnes a year, as it ramps up its core business activity of producing vitamins from palm oil.

The firm, a 55% subsidiary of Hovid Bhd, produces Vitamin E extracted from crude palm oil, and in the process gets bio-diesel or palm methyl ester as a by-product.

Carotech expects strong revenue growth from bio-diesel sales, given the growing global demand for green fuel, as nations from Asia to Europe seek ways to reduce dependence on fossil fuels and cut green house gas emission.

“We have gotten a head start in the market as we have been supplying bio-diesel to oil traders since 1995,” managing director David Ho told Reuters. “Now we just have to be aggressive in securing new clients.”

Ho said bio-diesel exports could contribute 60% of the company's revenue in 2007, up from 50% in 2006, as production increases.

Carotech, based in Perak, sells bio-diesel to oil companies for blending with petroleum fuel.

Earlier this year, it secured a two-year contract worth RM155mil to supply bio-fuel to Osaka-based Hatakeyama Oil Corp.

Carotech started operating its second vitamin extraction plant in May and aimed to start another unit by June 2007, Ho said.

He said Carotech's bio-diesel prospects were unlikely to take a big hit due to a spike in crude palm oil prices and a decline in petroleum, which has sparked a global debate on the viability of vegetable oil-based bio-fuels.

“It will affect us slightly. We will try to pass it on to our bio-diesel prices.”

The official did not disclose Carotech's exact bio-diesel prices, but said it sells the bio-fuel at US$600 to US$700 per tonne in short- and mid-term agreements.

The company posted a net profit of RM12.3mil for the year ended June 2006, an increase of 70.8% from RM7.2mil in 2005.