Presentation Outline

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1 Conference on Green Tech for SMEs in Palm Oil & Palm Biomass 28 th July, 2011 Sandakan Community Hall Sabah Market Outlook for Downstream Industries using Palm Biomass Lenn Gomes Business Development POIC Sabah Sdn Bhd Presentation Outline Major Oil Palm Biomass & Sources Outlook for Biomass from Plantations (Fronds, Trunks) Outlook for Biomass from Mills (POME, EFB) Outlook for Biomass from Palm Kernel Crusher (PKS) Summary & Conclusions

2 Major Oil Palm Biomass and Sources Fronds POME Oil Palm Mill FFB EFB Plantation Palm Kernel Mesocarp Fibre PKS Trunks Palm Kernel Crushing Plant PKC Traditional Use of Palm Fronds Throw on the ground Fertiliser

3 MARDI s approach Ingenierios Analpes Ltda: Cable Transport System

4 Some Details of MARDI s Animal Feed Business Animal feed from oil palm fronds for ruminants at Felda Bukit Sagu, Kuantan, set up in July 2008 Pellets manufactured using technology from Japan and Germany Factory was erected on 1.5 hectares of land at a cost of RM14.1 mil Capacity 1,200 tonnes per shift per month; 3 shifts/day; 13 workers Price: Blended - RM30/40 kg bag; non-blended - RM17/40kg bag Palm fronds: RM65/tonne World Meat Consumption Industralised Developing 300 Million tonnes Source: FAO (From International Feed Industry Federation Website)

5 B illio n T o n n e s Global Meat Market Demand Growth % + 19% + 16% % % Source: Kennes (Rabobank), 2010 World Grain Consumption Billion Tonnes F % 60 % Food Animal Feed & Other Uses Source: FAO

6 Projected world growth in demand for animal feed Source: FAO Other Market Opportunities for OPF Organic Fertiliser Pulp & Paper Biofuel MDF/Particle board

7 Plantation Biomass from Plantations: Oil Palm Trunks Replanting Trunks Plywood * Located in Kedah and Johor * 28.5 ha of manufacturing facilities and storage plant * Located in Penang * High quality 9mm, 12mm, 15mm & 18mm OPT plywood

8 Engineered Lumber Engineered Lumber Applications

9 Conversion Rate for Engineered Lumber Manufacture 2.1 Oil palm trees 1 m 3 MyScrim TM Lumber Raw Materials Requirements for a Factory Assumptions: a) An OPT volume = 1.11 cubic meter b) 85 % of the OPT is used c) 100 % compression d) 136 OPT per ha From FRIM One cubic meter of MYScrim-OPT requires 2.1 OPTs. Factory capacity 110,000 m 3 of MYScrim-OPT per year requires only 234,000 OPT Plantation acreage required: 1,720 ha

10 Medium Density Fibreboard (MDF) Amount of oil palm biomass required per m 3 of MDF (750 kg) Source of oil palm biomass EFB OPF OPT Amount of green (wet) oil palm biomass required 3.58 tonnes 4.59 tonnes 5.67 tonnes MDF consumption forecast to grow at an annual average rate of around 5 per cent from 2009 to 2013 By 2013, North Asia will be producing 45 per cent of the world s MDF China alone will be producing 41 per cent prices expected to increase by 6 to 7 per cent annually Historical & Projected Tropical Plywood Prices* US$ per m Malaysian plywood prices (July, 2011) 2.7mm: $ mm: $ Source: ITTO Production costs: $ Non-tropical hardwood plywood Tropical hardwood plywood Softwood plywood *Data source: ITTO, 2009

11 Housing Industry Recovery in Key Regions N America Housing Industry Recovery in Key Regions Europe House Price Growth in Europe Source: RICS, 2011

12 Asia-Pacific Demand Trends Million m Paper & paperboard Wood pulp Particleboard & fibreboard Sawnwood & plywood Other industrial roundwood Source: FAO, 2009 Biomass From Mills: POME, EFB, Mesocarp Fibre POME EFB Mesocarp Fibre

13 Palm Oil Mill Effluent (POME) Boustead EFB/POME Organic Fertiliser 30,000 tonnes EFB/yr; 90,000 tonnes POME/yr Net: 15,000 tonnes of organic fertiliser/yr Payback period (10%): 5 years Nutrient Concentration (% dry matter) Ash N P K Ca Mg C ph

14 Regional Share of Fertiliser Consumption 2007/8-2011/12 Source: FAO

15 World Fertiliser Supply-Demand Balance ( 000 tonnes) Region N,P,K 2007/ / / / /12 Empty Fruit Bunch (EFB)

16 Best to Process EFB First at Mill Szetech Engineering MSHK Engineering Muar Ban Lee YKL Sawipac MVance Facilitates handling and transportation Specs of Oil Palm Fibre from CM Fibre Processing Sdn Bhd Length of Fibre : 76mm - 250mm Impurity level: 6% Moisture content in fibre : 15% - 18% Oil content : % Fibre content in Empty bunch : 23% - 25%

17 Just a Step or Two from Value Adding Mattress Filling Ecomat Solid Fuel: Pellets/Briquettes

18 Briquettes Pellets vs. Briquettes Pellets Less power consumption less grinding & pressing Can be made of a variety of materials (wood, agricultural residue, paper, mixtures of feedstocks) & come in various sizes Lower repair and maintenance costs and faster start-up times Can have much higher moisture content up to 15% Requires large power-consuming hammermills Requires expensive after-coolers, dust collection systems & drum-type drying systems Using dust fines to make pellets risks explosions, fires, & respiratory problems Have 15 times surface area for same weight of briquettes moisture uptake reduces calorific value and increases shipping weight Export Potential Global demand for briquettes & pellets: 12 million tonnes in 2008 Europe & North America accounted for 97% of global demand EU: Biomass generating capacity: 10,000 MW by 2013 North America: Coal-fired power plants capacity: 360,000 MW Source: renewableenergyworld.com

19 Example: Income for Palm Oil Mills Ex-mill price for palm briquette: US$50-60 per tonne Annual income: US$2,160,000 2,592,000 Source: (Renewable) Packaging Fluting Recent Price Trend of RB Fluting in Europe 435 Euros/tonne /21/ /28/2010 Source: FOEX, /4/2011 1/11/2011 1/18/2011 1/25/2011 2/1/2011 2/8/2011 2/15/ /7/2011: 478 Euros/tonne Cost of production of unbleached fluting medium paper from palm EFB fiber is ~ US$220 to US$250/tonne Source: Leong, ICOPB 2010

20 Shannon Boase President Earth Cycle Packaging 2009 Social Venture Network (SVN) Innovation Award 2008 (Very prestigious) DuPont Award: Packaging Innovation 2007 Produce Marketing Association (PMA): Impact Award for Sustainability GLOBE award: Technology Innovation and Application Product Features Molded fiber packaging Natural: free of bleach, dyes and chemicals Certified home compostable and renewable Recyclable FDA and CFIA Certified, Food Grade Packaging Water and grease resistant Microwavable Major Customers Wal-Mart, Wegman s, Trader Joe s, Publix, Kroger, Whole Foods, Loblaw s & Sobey s Global packaging consumption by materials, % Growth 40% US$ billions % 0% 50-20% 0 Other Glass Metal Flexible plastics Rigid plastics Paper and board -40% Source: World Packaging Organisation

21 Global Market Packaging Forecast US$ billions % Packaging growth: 23.5 % Sustainable packaging growth: 93 % 32 % Sustainable Packaging Total Packaging Source: Pike Research, 2009 Wood Plastic Composite (WPC) Polyethylene Pellets Pulverised fibre Source: Strandex Corp Source: FPL Wood-Plastic Composite Pellets

22 Examples of WPC Products

23 WPC Application in Mercedes Benz E Class 20% weight saving achieved with fibre thermoset door panels Source: Suddell, 2003 Global WPC Industry Highlights Projected to advance 10.5% per year to $2.4 billion in 2013 Demand drivers: long life spans; low maintenance resistance to insects and exposure to the elements can be cut and hewn like natural wood environmentally friendly Thousand tonnes Major Producers (2009) USA China Europe Thousand tonnes China Production Thousand tonnes US Production Source: Fredonia

24 US W-SPF* & Composite Lumber Price Forecast * SPF (Spruce-Pine-Fir) 1 Mbf (thousand board feet) ~ 2.4 m 3 Biomass From Palm Kernel Shell (PKS) Oil Palm Mill Palm Kernel PKS Palm Kernel Crushing Plant

25 Activated Carbon 1 gram of AC has a surface area of between 500 and 1500 m 2 Common Applications of Activated Carbon Water purification Air filters in gas masks and respirators Gas purification Gold purification Metal extraction Medicine Sewage treatment Filters in compressed air

26 Global Activated Carbon Industry Highlights Global demand to expand 9.9% annually through 2014 to 1.7 million tonnes US represents the largest national market with 15% growth through 2014 to 690,000 tonnes Main driver: new EPA emission standards China growth projected at 10% through 2014 Main driver: economic growth Major players: CECA Specialty Chemicals (France), Calgon Carbon Corp. (US), Clarimex SA de CV (Mexico), Haycarb Ltd. (Sri Lanka), Kuraray Chemical Co. Ltd. (Japan), MeadWestvaco Corp. (US), NORIT Americas Inc. (US), Osaka Gas Chemicals Co. Ltd. (Japan), PICA (France) Biomass from one hectare of OP Plantation Felled palm trunk once every 25 years dry weight = 74.5 kg Palm fronds from felling; dry weight = 14.5 kg from pruning; dry weight = 10.4 kg FFB = 20 tonnes; dry weight = 10.6 tonnes EFB = 4.6 tonnes; dry weight = 1.6 tonnes Fibre (12-13% of FFB); dry weight = 1.4 tonnes Shell (6% of FFB); dry weight = 1 tonne Effluent (60% of FFB); Biogas 2.8 m 3 / tonne of effluent Malaysia OP plantation area: 4.7 million ha Sabah OP plantation area: 1.4 million ha

27 Summary of Commercial Opportunities for Oil Palm Biomass Wood Panel Products Wood Plastic Composites Animal Feed Fuel Pulp & Paper Activated Carbon Food Fertiliser Many thanks Lenn Gomes Business Development POIC Sabah Sdn Bhd