IOI to spend RM1b to boost refining capacity
Posted by Labels: IOI Corp, Lee Shin Cheng, palm oil, RSPO, specialty fatsIOI Corp is investing RM1 billion to expand and upgrade its refineries and specialty fats plants in Malaysia and the Netherlands. The money will be sourced from shareholders.
Yesterday, IOI Corp Bhd's shareholders approved a renounceable 1-for-15 rights issue of up to 421 million shares priced at RM2.90 each that would raise RM1.22 billion. IOI's single largest shareholder of 41 per cent stake, Progressive Holdings Sdn Bhd, will buy all entitled shares. Progressive is owned by IOI executive chairman Tan Sri Lee Shin Cheng and family.
"About RM1 billion will go to expanding our refineries in Pasir Gudang and Rotterdam," said Lee.
"We're adding 450,000 tonnes a year capacity to the Rotterdam refinery. There will also be a new 100,000 enzymatic line to produce natural hard stock for margarine-making," he told reporters after the company's shareholders' meeting in Putrajaya yesterday.
Greater health awareness and green consumerism in Europe has spawned demand for organic and natural food ingredients. Lee said the new plant in Rotterdam will be more energy efficient and use enzymes (instead of chemicals) to churn out premium quality specialty fats.
IOI's 1.3 million tonnes per year refinery in Pasir Gudang will see expansion by 150,000 tonnes. Together with it are additional specialty fats plants to make super olein, cocoa butter equivalents and betapol infant milk.
The Roundtable on Sustainable Palm Oil (RSPO) will meet next week to update on the progress of supply and purchase of green palm oil.It was reported that environmental activists within RSPO have proposed new greenhouse gas emission requirements to existing principles and criteria.Sarawak Oil Palm Plantation Owners' Association, Malaysian Palm Oil Association and Indonesia-based Gabungan Pekebun Kecil Indonesia (GAPKI) objected to this proposal.
Lee said the RSPO is voluntary and cannot infringe on the sovereign rights of any nation in deciding the right to use its land in accordance to its own economic and social needs."As a founding member of RSPO, we have utmost faith in the wisdom of all stakeholders to arrive at a more balanced outcome," he said. IOI has been preparing and training for the RSPO certification since 2007.
For the past two months, palm oil has been trading at between RM2,000 and RM2,200 per tonne on Bursa Malaysia Derivatives Market. Asked if planters like IOI Corp are comfortable with current prices, executive chairman Tan Sri Lee Shin Cheng said: "If prices trade between RM2,200 and RM2,500 per tonne for the next few months, I think, this level is acceptable to planters and manufacturers."
"Palm oil, being a very affordable vegetable oil, continues to see strong global demand. That's why we're expanding capacity," he said.
Robust demand is being fuelled by the US and Europe choosing palm oil over partially-hydrogenated soft oils that is loaded with artery-clogging artificial trans fat. Medical studies have shown consumption of artificial trans fat increase the risk of heart attacks and strokes.
From January 1 2010, all 88,000 restaurants in California are banned from using partially-hydrogenated soft oils that contain the artificial trans fats. Palm oil, a healthy substitute to make margarine, shortenings and baking fats is becoming popular there. "Many food companies in the US and Canada have switched to natural palm oil and bakery fats. We've seen increased orders from New York City and lately enquiries from California," Lee said.
Yesterday, IOI Corp Bhd's shareholders approved a renounceable 1-for-15 rights issue of up to 421 million shares priced at RM2.90 each that would raise RM1.22 billion. IOI's single largest shareholder of 41 per cent stake, Progressive Holdings Sdn Bhd, will buy all entitled shares. Progressive is owned by IOI executive chairman Tan Sri Lee Shin Cheng and family.
"About RM1 billion will go to expanding our refineries in Pasir Gudang and Rotterdam," said Lee."We're adding 450,000 tonnes a year capacity to the Rotterdam refinery. There will also be a new 100,000 enzymatic line to produce natural hard stock for margarine-making," he told reporters after the company's shareholders' meeting in Putrajaya yesterday.
Greater health awareness and green consumerism in Europe has spawned demand for organic and natural food ingredients. Lee said the new plant in Rotterdam will be more energy efficient and use enzymes (instead of chemicals) to churn out premium quality specialty fats.
IOI's 1.3 million tonnes per year refinery in Pasir Gudang will see expansion by 150,000 tonnes. Together with it are additional specialty fats plants to make super olein, cocoa butter equivalents and betapol infant milk.
The Roundtable on Sustainable Palm Oil (RSPO) will meet next week to update on the progress of supply and purchase of green palm oil.It was reported that environmental activists within RSPO have proposed new greenhouse gas emission requirements to existing principles and criteria.Sarawak Oil Palm Plantation Owners' Association, Malaysian Palm Oil Association and Indonesia-based Gabungan Pekebun Kecil Indonesia (GAPKI) objected to this proposal.
Lee said the RSPO is voluntary and cannot infringe on the sovereign rights of any nation in deciding the right to use its land in accordance to its own economic and social needs."As a founding member of RSPO, we have utmost faith in the wisdom of all stakeholders to arrive at a more balanced outcome," he said. IOI has been preparing and training for the RSPO certification since 2007.
For the past two months, palm oil has been trading at between RM2,000 and RM2,200 per tonne on Bursa Malaysia Derivatives Market. Asked if planters like IOI Corp are comfortable with current prices, executive chairman Tan Sri Lee Shin Cheng said: "If prices trade between RM2,200 and RM2,500 per tonne for the next few months, I think, this level is acceptable to planters and manufacturers."
"Palm oil, being a very affordable vegetable oil, continues to see strong global demand. That's why we're expanding capacity," he said.
Robust demand is being fuelled by the US and Europe choosing palm oil over partially-hydrogenated soft oils that is loaded with artery-clogging artificial trans fat. Medical studies have shown consumption of artificial trans fat increase the risk of heart attacks and strokes.
From January 1 2010, all 88,000 restaurants in California are banned from using partially-hydrogenated soft oils that contain the artificial trans fats. Palm oil, a healthy substitute to make margarine, shortenings and baking fats is becoming popular there. "Many food companies in the US and Canada have switched to natural palm oil and bakery fats. We've seen increased orders from New York City and lately enquiries from California," Lee said.
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