BIOREFINERY POTENTIALS IN SABAH

BIOREFINERY POTENTIALS IN SABAH By Pang Teck Wai, Bilson Kurus and Lee Ming Tong POIC Sabah Sdn Bhd BIO BORNEO 2013 Delivering The Borneo Bioeconomy Innovation The Magellan Sutera Harbour Resort, Kota Kinabalu, Sabah 19 20 February 2013

PRESENTATION OUTLINE Introduction Biorefineries and its Global Perspective Biomass Resources and Availability in Sabah How to Realize the Biorefinery Potentials in Sabah The Role of POIC Lahad Datu Conclusions

INTRODUCTION

INTRODUCTION Sabah state of Malaysia is located at the northern portion of Borneo Island with a land area of 73,620 KM 2. It is the largest oil palm growing state in Malaysia (1.43 million hectares). Predominantly agro-forestry based economy. With relatively little industrial activities. Sabah State government established Palm Oil Industrial Cluster (POIC) Lahad Datu to spearhead the state industrial efforts in accelerating the state economy.

INTRODUCTION NATIONAL BIOMASS STRATEGY 2020 Was launched in November 2011. Creation of wealth from biomass for high value-added uses. To start with oil palm biomass. Set to build several biorefinery clusters in Malaysia. Sabah has a role to play in the development of biorefinery sector. - A lot of biomass Source : Agensi Inovasi Malaysia (2012)

INTRODUCTION The objective of this presentation is to highlight : Biorefineries and its global perspective. Biomass resources and availability in Sabah. How to realize the biorefinery potentials in Sabah. The role of POIC Lahad Datu.

BIOREFINERIES AND ITS GLOBAL PERSPECTIVE

BIOREFINERIES AND ITS GLOBAL PERSPECTIVE BIOREFINERY CONCEPT AND PRODUCTS Thermochemical Transformation Material Products Fertilizer Biomaterials Organic acids & extracts Glycerine Chemicals & polymers Food Animal feed Biochemical Transformation Energy Products Bio-methane Bioethanol Synthetic liquid biofuels (FT) Electricity & heat Biodiesel Biohydrogen

BIOREFINERIES AND ITS GLOBAL PERSPECTIVE WHY BIOREFINERY? High value of biorefinery products. Lot of products with wide applications. Technologies are available and emerging for conversion of cellulosic materials to bioproducts. Attractive government incentives. Biorefinery products can substitute petroleum products and make products biodegradable.

BIOREFINERIES AND ITS GLOBAL PERSPECTIVE Bio-chemicals Bio-ethanol Wood industry Pellets Bio-energy Animal feed fertilizer 0 500 1000 1500 2000 2500 3000 3500 4000 Value of bioproducts (RM/tonne dry biomass) Relative high value of biorefinery products to other bioproducts from Biomass (Agensi Inovasi Malaysia, 2011 2013).

BIOREFINERIES AND ITS GLOBAL PERSPECTIVE GLOBAL PERSPECTIVE OF BIOREFINERIES Future world demand for bio-products from biorefineries is expected to increase significantly, because of : Increasing public pressure for environmental sustainable raw materials as the alternative to the use of fossil fuels. Increasing energy security fears. Rising prices of petroleum and petroleum products. Low barriers to market entry. Government support.

BIOMASS RESOURCES AND AVAILABILITY IN SABAH

BIOMASS RESOURCES AND AVAILABILITY IN SABAH Land use in Sabah (2011) Land use (000 ha) (%) National Forests & State Land 4,091 55.6 Plantation Forest 214 2.9 Oil Palm Plantations 1,415 19.2 Rubber Holdings 87 1.2 Rice Fields 43 0.6 Coconut Farms 18 0.2 Cocoa Holdings 7 0.1 Other Crops 27 0.4 Other Land Uses 1,460 19.8 Total 7,362 100.0 Source : Department of Statistics Malaysia (2012)

BIOMASS RESOURCES AND AVAILABILITY IN SABAH Biomass resources and availability in Sabah Biomass Sources Availability (%) Oil Palm Residues 95.8 Forest and Timber Wastes 3.3 Others 0.9 Total 100.0

BIOMASS RESOURCES AND AVAILABILITY IN SABAH Estimated oil palm biomass generated in Sabah (2010 2020) Biomass Type Production Dry Weight (million tonnes/year) Oil Palm Fronds 13.8 17.3 Oil Palm Trunks 4.2 5.3 Empty Fruit Bunches 2.0 2.5 Mesocarp Fibres 2.1 2.6 Palm kernel Shells 1.2 1.5 Palm Oil Mill Effluent 0.6 0.8 Total 24.0 30.0 source : Agensi Innovasi Malaysia (2011)

HOW TO REALISE THE BIOREFINERY POTENTIALS IN SABAH

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH Factors for consideration : Accessibility and mobilization of biomass Biomass Standards and pricing Technology and market access Transportation and logistics Infrastructure Financial support Environmental regulation Human capital resources Policies and fiscal incentives

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH ACCESSIBILITY AND MOBILIZATION OF BIOMASS Issues Need to move the biomass from sources for biorefinery uses - Need consistent and constant biomass supply Actions Strengthen the awareness and confidence of biomass owners on the potential and feasibility of investment in biorefineries - Large amount of biomass required - Competitive pricing of biomass Government support Cooperation of biomass owners Timely delivery of biomass

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH BIOMASS STANDARDS AND PRICING Issues Lack of standards and specifications of biomass Actions To speed up the development of biomass standards and specifications Lack of pricing mechanism Study of pricing mechanism Publish the price of biomass at regular basis

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH TECHNOLOGY AND MARKET ACCESS Issues Actions Technology access Government support in technology link up and - Proven technology market development - Adaptable to local conditions and feedstock - Cost effective Lack of awareness on domestic and international market access

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH TRANSPORTATION AND LOGISTICS Issues High cost of transportation (biomass mobilization, fuel cost etc) Need to facilitate aggregation of biomass Actions Improve road quality and system Government support in the establishment of alternative mode of transportation (light rail, barge) Finding suitable biomass collection centers

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH Issues Availability of basic infrastructure and facilities (water, electricity, road, port facilities, industrial land, biomass collection facilities) INFRASTRUCTURE Actions Make good use of the available industrial infrastructure and facilities (such as that at POIC Lahad Datu) Government support in infrastructure improvement and development

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH FINANCIAL SUPPORT Issues High startup cost and CAPEX Low funding from financial institutions Actions Make good use of the already available attractive incentives from federal government Government support in facilitating funding support from financial institutions and other sources

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH ENVIRONMENTAL REGULATION Issue Difficulty and uncertainty with environmental regulation compliance Action Government to assist with Environment Impact Assessment (EIA) and other environmental regulatory issues

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH HUMAN CAPITAL RESOURCES Issue Lack of qualified local human capital to manage the biorefinery establishment Action To provide training courses for all levels of human resource needed in the biorefinery sector

HOW TO REALIZE THE BIOREFINERY POTENTIALS IN SABAH POLICIES AND FISCAL INCENTIVES Issue Need government support for the establishment of the biorefinery sector in Malaysia Action Policy setting for the government to provide the required assistance (physical, financial, technical and human capital development) to kick start the biorefinery industries

THE ROLE OF POIC LAHAD DATU

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU Located at the centre of oil palm growing belt in Sabah 1.4 million hectares (28% of Malaysia s total plantation). 5.84 million tonnes of CPO production (31% of Malaysia s total production). 124 mills in Sabah (29% of 425 mills in Malaysia). 12 refineries in Sabah (25% of 52 refineries in Malaysia). 24 30 million tonnes (dried) palm biomass (empty fruit bunches, oil palm trunks, oil palm fronds, palm kernel shell, mesocarp fibres and palm oil mill effluent). Source: MPOB website, Economics & Industry Development Division, Statistics (2012). Location map of Palm Oil Industrial Cluster Lahad Datu

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU Palm Oil Industrial Cluster Concept Research Institutes Residential Educational Institutions Bulkers Palm Kernel Crushing Plant Other Industries Biofuel Warehouses Animal feed Biomass Financial Institutions Bioenergy Machinery / Equipment Companies CPO Mills Oil Palm Plantations Fertilizers Energy Suppliers Refineries Commercial Development Bio-based Chemical Oleochemicals Food based industries Government & Related Agencies Transportation Companies Renewable Energy Companies Port Handlers / Operators Technology Providers

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU INDUSTRIALIZING SABAH THROUGH INDUSTRIAL CLUSTERING INVESTMENT POTENTIAL CPO MILLS OLEOCHEMICAL EDUCATIONAL INSTITUTIONS BIOFUEL PORT HANDLERS/OPERATORS FINANCIAL INSTITUTIONS LAND DEVELOPERS BULKERS TECHNOLOGY PROVIDERS PORT & LOGISTICS CLUSTER OIL & GAS CLUSTER POIC RM50 BILLION O&G RM20 BILLION LOGISTICS RM20 BILLION OTHERS RM10 BILLION OIL PALM PLANTATIONS REFINERIES TRANSPORTATION COMPANIES MACHINERY EQUIPMENT COMPANIRES FERTILIZER BIOMASS REAL ESTATE COMPANIES WAREHOUSES RESEARCH INSTITUTES GOVERNMENT & RELATED AGENCIES SMI & FOOD CLUSTER ENERGY SUPPLIERS OTHER CLUSTER THE CONCEPT OF PALM OIL INDUSTRIAL CLUSTER & OTHER CLUSTERS

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU Value Adding Opportunities In Biomass-based Downstream Industries Products Currently Underutilised Downstream Opportunities 3.5 million trees Oil Palm Trunks Compost Fibre Pulp & paper MDF Pellets 6.99 million tonnes Empty Fruit Bunches Value Adding Opportunities Biofuels Finished Paper Product Bio-Ethanol Bio-based Chemical Briquette Furniture from Oil Palm Lumber Particle Board / Moulded Particle Board 20.60 million tonnes Oil Palm Fronds Wood Plastic Composite Plywood Animal Feed from Oil Palm Fronds

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU Land Development Phase Land area (Acres) Industrial Cluster Activities Status I 600 Oil-based Industries, Bulking. Developed II 550 Fertilizer, Supporting Industries, Commercial. Developed IIIA 547 Biomass, Oil & Gas, SMI, Supporting Industries, Commercial. On going IIIB 2,753 Ship Building & Repair, Renewable Energy, Food Industry, Petrochemical, SMI, Commercial, Supporting Industries. Planning

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU POIC Lahad Datu Port 1. Liquid Terminal 20M draft 500M from shoreline 2 berths to accommodate vessels up to 100,000 DWT 2. 10M to 12M draft 60M 70M from shoreline 5 loading platforms, 600M berthing length Can accommodate vessels / barges up to 20,000DWT Dry Bulk Terminal 14M draft 2 outer berths to accommodate vessels up to 30,000DWT 12M draft 2 inner berths to accommodate vessels up to 10,000DWT Cargo handling equipment 2 high speed Kalmar bulk loader on the western side of jetty. Conveyer belt system to handle bulk cargo up to 1,000 tonnes per hour. 3. Proposed Container Terminal Phase 1-15M draft 400M Length Can accommodate vessel up to 65,000DWT 50,000TEUs

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU POIC Infrastructure Piperacks - Pipe rack provided by POIC to connect to investors lots within Phase 1 to the liquid jetty. - Investors are required to lay their own pipeline. Interchange - Located within the liquid terminal with boiler and compress air facility. - Pipelines are provided from interchange to berth. Electricity - Double Circuit Underground cabling system. - Electricity supply up to a total of 50MW. - At least one ring of 11kV underground cabling circuit running along each company lot. Water - 3 Million Gallons (11.35 million litres) in Permastore Tanks. Telecommunications - Underground cabling system. - Provided by Telekom Malaysia (TM) within the whole POIC area.

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU Critical Strength and Advantages Governmentbacked 2 4 5 8 9 Existing Industrial Players 12

PALM OIL INDUSTRIAL CLUSTER LAHAD DATU Putting the Pieces Together : Opportunities

CONCLUSIONS With a lot of biomass feedstock, Sabah is well-placed to play an important role in biorefinery sector. In order to realize fully the biorefinery potentials, there is the need for : mobilization of biomass to end-users. overcoming the challenges in pricing, technology, market access, transportation and logistics, infrastructure, financial assistance, environmental issues and human capital development among others. strong support from the government and cooperation of private sector. POIC Lahad Datu is ready to facilitate the development of the biorefinery sector in Sabah.

Thank You POIC Sabah Sdn Bhd 17 th Floor, Wisma Perindustrian Jalan Istiadat, Teluk Likas 88400 Kota Kinabalu, Sabah, Malaysia