FGV INKS MOU WITH CHINA'S CMEC TO EXPLORE PAPER PULP PROJECT

KUALA LUMPUR, Dec 18 (Bernama) -- FGV Holdings Bhd (FGV) has signed a Memorandum of Understanding (MoU) with China Machinery Engineering Corporation (CMEC) to explore the feasibility of a joint-venture to establish paper pulp production facilities as well as potential distribution and commercialisation of the paper pulp business to the global market.

CMEC’s core business is engineering contracting, specialising in the construction of power projects, trading, investment, research and development and international services.

The company is currently listed on the Hong Kong Stock Exchange with a current market capitalisation of HK$15.88 billion (about RM8.58 billion).

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It collaborates with research institutes in Hangzhou and Guangxi, using technology to convert empty fruit bunches (EFB) into paper pulp for commercialisation. 

FGV Interim Group President and Chief Executive Officer Datuk Wira Azhar Abdul Hamid said given the volatility of CPO prices, this initiative was in line with the company’s strategy to focus on downstream activities, by ensuring it fully utilised the by-products from existing operations to create value for the group.

“FGV produces approximately 3.47 million tonnes of EFB per year from its 68 mills all over Malaysia.

“This green project also aligns with our waste to wealth initiative in order to ensure the operations are more sustainable,” Azhar said in a statement.

He said with this MoU, FGV hoped to explore the opportunity to integrate the operations of its existing mills with CMEC’s engineering expertise and to establish the paper pulp production facilities with an initial capacity of 50,000 tonnes per annum. 

Furthermore, FGV could leverage on CMEC’s extensive engineering and domestic knowledge on China’s pulp market, he said.

“Public awareness on the use of green and sustainable products such as paper pulp is increasing every year.

“This is a great business potential for FGV to explore as we leverage on the huge raw material source to our competitive advantage,” Azhar added. 

China’s pulp and paper industry has been growing at an exponential pace, registering growth of 182.3 per cent from 2006 to 2016.

This is in line with the republic’s import volume of paper pulp between 2009 and 2017 which showed a growth of 73.4 per cent, with 23.72 million tonnes imported in 2017.

Given the pulp price per tonne of close to US$900 (US$1=RM4.17), FGV expects to capitalise on China’s demand for paper. 

-- BERNAMA