Sime Darby Plantation braces for anti-palm oil challenges – Business News


KUALA LUMPUR: Sime Darby Plantation Bhd has taken measures to reduce the risk arising from the anti-palm oil sentiment by positioning itself in several producing and consuming countries, which allows it to switch sale offerings between unrefined and refined products.

Executive Deputy Chairman and Managing Director Tan Sri Mohd Bakke Salleh said the company was unaffected by the European Parliament’s proposed move to phase out the use of palm oil in biofuels under its revised Renewable Energy Directive (RED).

“We acknowledge that anti-palm oil sentiments are nothing new and have been one of the main challenges faced by all palm oil companies for a long time.

“To mitigate this risk, we have prepared ourselves, including segregating certified sustainable palm oil (CSPO) as well as imposing a greater focus on high-value specialty and niche products, thus enabling us to hedge against any potential impact on revenues from specific markets,” he told Bernama when contacted through email.

Asked on the impact on its unit, New Britain Palm Oil Ltd’s (NBPOL) refinery in Liverpool, the United Kingdom, he reiterated that the company had complied with the European standards for the commodity and had the benefit of shifting sale offerings based on the demand.

NBPOL, acquired by Sime Darby Plantation in March 2015, has landbank totalling 139,899 hectares (ha) in Papua New Guinea and Solomon Islands, of which 86,542 ha were planted with oil palm.  It is worth noting that NBPOL also has more than 5,600 ha of sugar cane plantation and 8,956 ha of grazing pasture.

NBPOL also owns 12 oil palm mills and two refineries, including the one in Liverpool, as well as a seed production and plant breeding facility.  Another of Sime Darby’s wholly-owned subsidiary, Sime Darby Unimills B.V, is mainly involved in supplying tailor-made vegetable oils to the European mart, producing more than 450,000 tonnes of products per year.

The strength of Sime Darby Unimills is its diversity of processes, capable of manufacturing products ranging from hydrogenated to fractionated, double-fractionated, and interesterified oils, it said on its website.

Meanwhile, Sime Darby Plantation has been reportedly considering selling a 25 to 49 per cent stake in NBPOL and other options, including relisting the business.

According to a Public Investment Bank Bhd research note, Sime Darby Plantation may seek a valuation of at least RM6.6 billion for NBPOL, the amount paid when it acquired the company in 2015, which in return would contribute an additional cash of between RM1.7 billion to RM3.2 billion.

Sime Darby Plantation had built a strong and longstanding customer base, Mohd Bakke said, adding that it was poised to serve the needs of its European customers while continuing to strengthen its reputation and brand in the region as well as other emerging markets.

“Sustainability has always been among the top priorities of our business wherever we operate.

“Our commitment towards ensuring that we adhere to the highest standards and best practices will remain, including our full support of Malaysia’s aspiration to further raise the sustainability standard of its palm oil industry through the Malaysian Sustainable Palm Oil certification,” he added.

Voicing his disappointment on the EU’s “discriminatory and misguided” decision with regard to the palm oil ban, he pointed out that sustainability standards were already in place for the palm oil industry and that CSPO had long been available in the market.

“This EU resolution will also have far-reaching impact on millions of farmers and smallholders in all the palm oil-producing countries,” he said. – Bernama


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