jatropha

29-04-2008: DPS sees RM227m profit a year from jatropha plan

DPS Resources Bhd recently entered into a memorandum of understanding (MoU) to carry out research and development (R&D) on the cultivation of jatropha plants for biofuel production on a joint-venture (JV) basis with a Chinese company.

OSK Research has projected that the JV company would have an annual turnover for jatropha oil and by-products of RM720 million and RM360 million respectively, with net profit margin estimated at 35% to 40%.

The management indicated that DPS would hold 60% of the JV, said OSK Research. Assuming the ratio, this would increase DPS’ revenue by approximately RM650 million, which translated into an additional net profit of RM227 million per year, it added.

However, the research house said that it did not factor this into its forecasts as the venture was still in its infancy stage and it would take at least 10 years to achieve a full planting land. “The proposed investment is estimated at RM270 million, to be expended over the next 10 years, so as to achieve 66,343ha of planting land and 300,000 tonnes of biofuel production capacity per year,” it added.

“While its diversification into the biofuel business may be lauded given that the jatropha is seen as one of the best candidates for future biodiesel production, we remain conservative on this exercise as it is an unproven venture and DPS does not have any prior experience in the cultivation of the jatropha plant,” OSK Research said in maintaining its neutral call on DPS with a target price of 31 sen, pending further details.

DPS recently announced that its board had approved the MoU signed with Hainan LVBO Industry and Commerce Company Ltd (HLICC) to carry out R&D on the cultivation of jatropha plants for biofuel production on a joint-venture basis.

HLICC has been conducting research on the cultivation of jatropha trees for biofuel production for six years and has a 12.3ha research centre in Hai Kou, China.

According to DPS’ announcement to Bursa on the JV, HLICC was currently researching a new species of jatropha trees which yield higher levels of oil content, toxicity and oil extraction rate.

DPS closed unchanged at 30.5 sen yesterday with 61,000 shares traded.






13-02-2008: Carbon Capital Corp, Japan firm to invest RM2b in SCORE
by Ellina Badri

PETALING JAYA: Clean development mechanism (CDM) services provider, Carbon Capital Corporation Sdn Bhd is teaming up with Japan Carbon Mercantile Co Ltd (JCM) to undertake renewable energy projects worth RM2 billion.

Carbon Capital group managing director, William Kho said the two-phase project was part of the Sarawak Corridor of Renewable Energy (SCORE) initiative. The parties would jointly fund the project on 51:49 basis, he told The Edge Financial Daily.

“We are targeting to kick off the first phase in the middle of this year and are now negotiating with the state government for the land for the project,” Kho said.

On Monday, the two companies signed a memorandum of understanding (MoU) in Kuching for phase one of their programme which would require US$300 million or about RM1 billion, and be developed over five years.

The projects included developing a multi-feedstock biodiesel plant with an annual capacity of about 240,000 tonnes a year, and bulking facilities in Tanjung Manis, Sarawak.

The MoU would also see the JV developing 100,000 ha of jatropha and oil palm plantations, and potential biogas or biomass renewable energy projects under CDM programmes in Sarawak.

The second phase would involve increasing the capacity of the biodiesel plants to 500,000 tonnes a year and the development of another 100,000 ha of jatropha and oil palm plantations. This would require another RM1 billion investment.

Kho said the project was expected to create export revenue of more than RM800 million annually, as all the renewable energy produced would be exported to Japan. In the second phase, Carbon Capital would consider selling the biodiesel, biogas and biomass products to the local market.

He said the jatropha and oil palm plantations would mitigate the effect of rising crude palm oil prices, as Carbon Capital and its Japanese counterpart would not have to rely on third-party supply of feedstock, he added.

The JV would develop alternative biofuel feedstock, such as palm oil, to mitigate investment risks of the jatropha plantation, where the yields and economics were not yet well-established.

CDM is an arrangement under the Kyoto protocol which allows industrialised countries with a greenhouse gas reduction commitment to invest in projects that reduce emissions in developing countries instead of undertaking expensive emission reductions in their own countries.

Jatropha is a plant that can grow in almost all types of soil, and its oil can be processed to produce a high-quality biodiesel, while the residue can be processed into biomass to power electricity plants.

The biodiesel plant would be capable of utilising multi-feedstock of crude palm oil (CPO) and/or crude jatropha oil, and was designed to take into account future expansion of the production of other biofuels.