‘Green gold’ – a billion dollar industry

KOTA KINABALU: Crude oil may be called ‘black gold’, but 1Green Enviro Sdn Bhd has to tap into ‘green gold’ by converting biomass into paper.

Managing director of 1Green Enviro, Datuk Raymond Chan, said according to market research firm, Euromonitor, the global paper and paperboard market in 2010 was estimated to be worth US$320.3 billion (RM996.8 billion).

It is expected to grow a further 21.8 per cent by 2015 to US$390.1 billion (RM1,214 billion). The price of paper, paper products and pulp has been trending upwards since 2009.

“Although Malaysia also manufactures paper, it is a net importer. In 2010, it imported 508,881 metric tonnes worth RM1.1 billion of industrial brown paper.

“Local production only met 83 per cent of demand. Conventional industrial brown paper is made from a mix of 20 per cent softwood pulp and 80 per cent old corrugating cartons, which costs RM957 per metric tonne,” he said.

On the other hand, raw empty fruit bunches (EFB) generated from the palm oil industry costs as little as RM8.50 per metric tonne: to generate the equivalent amount of pulp for paper-making, the cost is only about RM350 per tonne.

This represents a three-fold cost savings and profit for manufacturers who substitute EFB pulp for softwood-corrugating carton pulp.

In 2010, Malaysian palm oil mills produced 70 million metric tonnes of biomass wastes, which includes 19.30 million metric tonnes of raw EFB.

“If we can convert these raw EFB into pulp, we can produce 5.15 million tonnes, which is equivalent to RM11.1 billion,” added Chan,

Presently, Chan said most of the palm oil industry’s biomass was incinerated to generate electricity for the mills or mulched into fertiliser. Some are converted into medium-density fibreboards, mats, mattresses and cushions, building materials and light furniture.

He explained it may come as a surprise for many but EFB are not normally used as raw material for paper due to the difficulties of removing lignin and other cellulose materials without damaging the fibres.

1Green Enviro is going full force with the construction of an integrated pulp-and-paper mill that will produce up to 70,000 metric tonnes of industrial brown paper a year, making it the biggest mill in Malaysia and the world, to use EFB as raw material.

Deputy chairman of 1Green Enviro, Lim Thiam Huat, said the secret to the company’s plans lies in its breakthrough technology for producing Recycled Bleached Mechanised Pulp (RBMP).

“This patented invention is the first of its kind in the world. Our patented technology produces better pulp fibres than existing methods,” he said, adding that the invention was the fruit of several years of research and testing by him and a renowned chemical engineer who has worked for decades in China’s paper industry.

“We have been producing significant amounts of paper each year at our test plants. Our papers have been independently tested and conform to commercial quality standards,” he added.

Tests by Universiti Sains Malaysia found 1Green Enviro’s EFB industrial brown paper to be comparable in quality with corrugating medium paper made with conventional raw materials.

The Forest Research Institute of Malaysia found that the pulp’s average fibre length of 1.9mm to be suitable for corrugating medium paper.

Industrial brown paper is used in a wide variety of products, such as paperboards, corrugated cartons, folding boxboards, paper bags, wrapping paper, moulded products, stationery and other paper-products.

With 1Green Enviro’s new pulp-and-paper mill, “we are now ready to commercialise production of EFB on a large scale,” Lim declared.

The mill in Malaysia is strategically located to tap into the ample supply of EFB.

In keeping with its environment-friendly commitment, it will also use oil palm biomass wastes as fuel to generate steam and electricity, and reduce its energy costs.

The mill will also recycle its water for reuse.

“We have a low-cost competitive edge and our main raw material comes from biomass that is so abundant. Malaysia is the second largest palm oil producer in the world,” said Chan.

He added their main market, at least in the initial years, would be Malaysia.

“Beyond that, we are looking at exporting this technology to Indonesia. We may use a franchising approach and appoint a country master franchisee. We are now receiving many keen enquiries locally and from overseas,” he said.

Meanwhile, the newly appointed director of 1Green Enviro, Izaddeen Daud, said 1Green Enviro is particularly keen on Indonesia as it is the world’s largest palm oil producer.

“We can be a consultant to set up new manufacturing plants there. They can use Indonesia’s plentiful supply of EFB and service their market directly,” said Daud who was a former managing director and the brainchild behind the incorporation of MARA Incorporated Sdn Bhd that primarily involved assets securitization of MARA and its investments.

Prior to heading MARA Inc, he was the chief executive officer for ASM Investment Berhad, and responsible for the overall business operation as well as investment activities.

“By setting up localised operations, we can reduce logistic costs and retain the low-cost advantage. Indonesia is an obvious technology export market as together with Malaysia we control 80 per cent of the world’s Palm Oil market,” Izaddeen envisioned.

Despite the so-called paperless revolution brought on by information and communication technology, paper remains in high demand.

Due to its biodegradability and recyclability, paper is considered a more environment friendly packaging material than plastic.

However, it is becoming a prized commodity as forests are becoming scarce and farmed trees take time to mature.

“At the moment, 17 trees are cut down to produce one metric tonne of pre-manufactured pulp for the paper industry,” said Izaddeen.

“If we can convert all of Malaysia’s EFB into paper pulp, we can save 88 million trees a year.

“These savings are difficult to ignore,” he pointed out.

European countries today, such as Denmark and Scandinavian countries, are very concerned about preserving the environment.

The green movement has led to increased awareness on products that are environmentally friendly and sustainable.

There is a huge demand for these products.

“Furthermore, under the Kyoto Protocol on Global Warming, companies in the developing world may sell carbon credits to corporations in the developed world.

By preventing the destruction of forests elsewhere, there is a possibility of carbon trading for our industry,” Izaddeen added.

With such exciting prospects, 1Green Enviro is poised to become a global conglomerate and perhaps one day soon, a Global Fortune 500 company.

This bodes well for Raymond Chan, Mohd Naziffudin Najib Abdul Razak and Lim Thiam Huat who initiated the company.

The trio are also the management team behind the Sagajuta Group of Companies, which has already made its mark in the construction industry with the iconic 1Borneo lifestyle hypermall in Kota Kinabalu and 1Gateway in Klang.

Chan has recently become as a substantial shareholder of Harvest Court Industries Bhd.

Both he and Mohd Naziffudin have been appointed directors of the listed company.

The company, in its effort to realise the full potential and value of its venture, has roped in Izaddeen Daud, because of his financial and strategic marketing expertise during his stint at Permodalan National Berhad (PNB) as Assistant Vice President in 1999 and responsible for analyzing, planning, implementing PNG’s investment services and overall marketing strategy which has successfully increased PNB’s fund size.

He started his career with Ernst & Young in early 1990s before joining Perwira Affin Merchant Bank Berhad as Senior Manager, Corporate Banking and Capital Market Division.

With his extensive experience and exposure in both government linked companies (GLCs) and financial institutions, Izaddeen is expected to bring 1Green Enviro to a higher level domestically and globally to supplement the value that has been created by three founders of the company.

In the meantime, 1Green Enviro is looking forward to “printing money” with its abundant, renewable and sustainable green gold.