issues, challenges and prospects of the palm oil … 1.pdf · issues, challenges and prospects of...

All Rights ReservedICOC 2010 – Oct 25 - 27

ISSUES, CHALLENGES and PROSPECTS of the

PALM OIL INDUSTRY

Conference on New Business Opportunities in

Oleochemicals and Biomass Sector 2011,

Kota Kinabalu, Sabah, MALAYSIA

March 1, 2011

All Rights ReservedMPOB/POIC 2011

• EMERY OLEOCHEMICALS – Who we are

• THE PREVALENT ISSUES IN– General Introduction– Regulatory Matters– Sustainability & Renewability– Renewable Energy– Anti-Dumping Measures

• CHALLENGES & PROSPECTS OF THE PALM OIL INDUSTRY– Challenges & Opportunities Ahead– The way forward

Content of Presentation

• IDENTITY RATIONALE

• WHO WE ARE

Emery Oleochemicals


The colored spiral represents a partnership

between Sime Darby Plantations Sdn. Bhd.

and PTT Chem International Pte Ltd.

The grey arc indicates the spectrum of

services and the partnership’s synergy.

Where the blue and grey meet represents

the solutions these strengths create for

customers.

Combined this dynamic shape represents

progressive thinking, strength, and

performance indicative of Emery

Oleochemicals and a symbol to believe in.

Welcome to our new identity which symbolizes our storyWelcome to our new identity which symbolizes our storyWelcome to our new identity which symbolizes our storyWelcome to our new identity which symbolizes our story

IDENTITY RATIONALE


WHO WE ARE

50:50 joint venture between PTT Chemical and Sime Darby Plantation.

The world's leading producer of oleochemicals from natural oils and fats.

Headquarters in Malaysia.

Sales 2008: Approximately € 776 million [US$ 1.1 bil].

1,100 employees operating production sites and/or service centers in

Asia, Europe and Americas.

Worldwide distribution network.

Over 160 years’ experience in oleochemicals.


VISION

“To become the

world leader in

value added

natural based

chemicals”

MISSION, VISION AND VALUE

VISION

“To become the

world leader in

value added

natural based

chemicals”

MISSIONWe will build on our strengths in employees, shareholders and operations in oleobasics as

a platform for future growth in oleochemicals and petrochemical specialty derivatives.

We will accomplish this by working with our customer partnerships and R&D centres of

excellence to deliver product innovation in the market place.

� Combined expertise & synergies in

plantations, oleochemicals & petrochemicals.

� Leverage opportunities for upstream &

downstream integration.

� Provide wide range of application-driven

solutions for end-users.

Emery Oleochemicals enhances your competitive advantage through partnership,

innovation and trust. Our sustainable solutions approach give your business a real

advantage.

VALUE

All Rights ReservedPOIC 2011

EMERY OLEOCHEMICALS WORLDWIDE

Dü

sse

ldo

rf

Loxs

ted

t

Cin

cin

na

ti

Toro

nto

Se

lan

go

r

Technology

Platforms

Production/Administration

Sales & Marketing

Shanghai

Tokyo

Hong Kong

Selangor

Loxstedt

Düsseldorf

Southampton

Toronto

Cincinnati

Jacarei

Seoul

Fatty Alcohols

Plastic Lubricants & Plasticizers

Triacetine

Glycerine

Ozone Acids

Methyl Esters

Fatty Acids

THE PREVALENT

ISSUES

• General Introduction

• Regulatory Matters

• Sustainability & Renewability

• Renewable Energy

• Anti-Dumping Measures


GENERAL INTRODUCTION

Chemical policies & Regulations can be related to:

• Government actions, market forces, industry best practices and

product stewardship.

Policies and Regulations influence economies, environment and way of life.

They impact:

• Markets

• Industries

• Supply (Value) chain

• Technological change over a period of time

Regulatory Impact Analysis (RIA)

• Formal plan for responding to the potential impact of policy on regulatory initiatives

Specifically for the Oleochemical Industry with a global footprint:

• Impact of Regulations such as REACh, ChAMP, etc., as well as Trade Policies needs to be

considered


REGULATORY MATTERS (1)

• All chemical products manufactured in or imported into Europe are subject to

registration under REACH

• Process of Registration

– Pre-registration

– Registration based on tonnage

• >1000t/a , CMR ≥1 t/a & R50/53≥ 100 t/a by Nov 30, 2010

• 100t/a > but < 1000t/a by May 31, 2013

• >1 t/a but < 100 t/a by May 31, 2018

• Regulatory Impact Analysis shows REACH influences economies, environment & way of life in

– Cost to Industry

• EU Commission estimates between €2.8bn - 5.2bn over 11 yrs.

• Testing costs alone are estimated at €2.6bn.

– Industries where they impact the way manufacturers, importers, formulators & end users conduct business in Europe & globally



“REACh” – China aka “PEANCS”

1. China's existing REACH-like regulation for chemical substances is known as

Provisions on the Environmental Administration of New Chemical Substances.

2. Issued by the State Environmental Protection Administration (SEPA) of the Ministry

of Environmental Protection (MEP)

3. Effective on October 15, 2003 with proposed changes slated to become effective

October 15, 2010.

4. Proposed changes includes data testing to be done in China

5. Existing" chemical substances, i.e. those that have been published to the Inventory

of Existing Chemical Substances manufactured or imported in China

6. The public list may be searched on the CRC website, currently located at

http://www.crc-mep.org.cn/iecscweb/defaultO.aspx including a confidential list of

2,994 substances.

7. A manufacturer/ importer may request an internal CRC search to confirm that his

"new" chemical substance was not previously notified/registered.



Chemical Assessment Management Program (ChAMP)

1. ChAMP encompasses U.S. SPP commitments and possible enhancements to EPA’s existing chemical program which includes:

• HPV Challenge-type program for High Production Volume “inorganic” chemicals

• Resetting the (Toxic Substances Control Act) TSCA Inventory

– Current TSCA Inventory contains “83,000 chemicals”

– Likely that many chemicals are no longer manufactured/imported or are produced only in low or episodic volumes

2. Main goal is to assess & regulate 6,750 organic HPV & MPV chemicals reported for 2006

3. Inventory Update Rule (IUR) by end of 2012

• 2,750 organic HPV chemicals (≥ 1M lbs/yr)

• 4,000 organic MPV chemicals (≥ 25,000 & < 1M lbs/yr)

4. EPA's Suspension Of ChAMP – Pending (as of July 19, 2009)

5. Abandonment of ChAMP means EPA will refocus its efforts toward implementing a command-and-control approach toward chemicals management policy

6. Anticipated successor to CHAMP is the Lautenberg Kids Safe Chemical Act.

7. In the wake of European REACH, EPA is under pressure to expect more from industry.


Implications of Trade Policies

� Free Trade Agreements

—AFTA; AFTA plus 3

—AKFTA; AIFTA & ACFTA : in effect as of 1 Jan. 2010

• Tariffs

— Identify the correct tariff codes to ensure lowest tariff

— Common Effective Preferential Tariff (CEPT) Scheme is a co-operation

among ASEAN countries to reduce intra-regional tariffs and eliminate non-

tariff barriers

� Latest Updates on Differential Export Tax of Palm oil products

– Indonesian Oleochemical producer have an advantage over Malaysian

producer

– The raw material is cheaper by 20-25% compared to Malaysia.


"Renewable" and "Sustainable"

• Understanding the Difference Between "Renewable" and "Sustainable"

– A process is renewable if it can be done more than once

– A process that's renewable, however, is not necessarily sustainable.

– To be "sustainable" or "capable of being sustained" is to be capable of being continued with minimal long-term effect on the environment, preferably, indefinitely.

• Drivers for Renewable Feedstock

– Environmental Benefit

– Renewable Feedstock

– Security of Supply

– Legislation

– New product functionalities

– Economics

– New Markets for Agriculture

– Technology platform

– Consumer Preference Green Products

RR


Roundtable Sustainable Palm Oil (RSPO)

• Formed in 2004 with the objective:

– To promote the growth and use of sustainable oil palm products through credible global standards and engagement of stakeholders.

• Has more than 389 members including:

– Oil palm growers, producers of consumer products, retailers, banks, investors and non-governmental organizations (NGOs).

• HQ in Zürich with the secretariat located in Kuala Lumpur.

Logo for RSPO Green Palm Certificate

• RSPO Supply Chain Certification

— A system where RSPO

Certified PO or products are

part of the supply chain of

RSPO Certified


Lifecycle of chemical products based on

renewable resources

• A full carbon footprint of a product incorporates every stage of the product's life, from

cradle to grave.

Source: Renewable feedstock in the chemistry


Regulations related to Renewable Energy

• EU Directive on Renewable Energy (RED)– Directive 2009/28/EC of the European Parliament and of the council of 23 April 2009

• Targets for the EU– 20% share of energy from renewable sources by 2020 and a 10% share of renewable

energy specifically in the transport sector

– Improves the legal framework for promoting renewable electricity

– Requires national action plans that establish pathways for the development of renewable energy sources including bio-energy

– Creates cooperation mechanisms to help achieve the targets cost effectively and establishes the sustainability criteria for biofuel

• In USA, Renewable Fuel Standards (RFS2)– Implemented on July 1st, 2010

– Requires diesel importers and refiners to use 1.15 billion gallons of

biodiesel in 2010.

• BIODIESEL TAX CREDIT (USA) – US$1 tax credit [tax credit reduces tax dollar-for-dollar]

– Biodiesel Tax Incentive expired on December 31, 2009

– Current Status: U.S. Senate did not extend the biodiesel tax incentive From the Consumer Energy Report


Anti-Dumping Measures

• Anti-dumping measures [(EC) No 1225/2009]

– Adopted after an investigation of the importing country, when dumping and material injury resulting therefrom has occurred.

– Notice of initiation of an anti-dumping proceeding concerning imports of certain fatty alcohols and their blends originating in India, Indonesia and Malaysia

• What is dumping?

– Company is dumping if it is exporting a product to the EU at prices lower than the normal value of the product (the domestic prices of the product or the cost of production) on its own domestic market.

– The EC is responsible for investigating allegations of dumping by exporting producers in non-EU countries. Investigation undertaken after receiving complaint from EU producers of the product concerned, but it can also do so on its own initiative.

• What is an anti-dumping proceeding?

– After receiving a complaint from the EU producers of the product concerned, the EC publishes a notice in the EU's Official Journal opening an anti-dumping proceeding.

– The maximum time limit for an investigation under these proceedings is 15 months.

– Detailed findings are published in the Official Journal, ex., as a regulation imposing anti-dumping duties or terminating the proceeding without duties being imposed.

CHALLENGES &

PROSPECTS OF THE

PALM OIL INDUSTRY

– CHALLENGES & OPPORTUNITIES AHEAD

– THE WAY FORWARD

“Innovation is the lifeblood that enables players in this

industry to meet the evolving needs of the consumers

needs”


Challenges & Opportunities Ahead (1)

• The Global Economy

– Major Developed Economy (USA, Eu, Japan, etc)

– Brazil, Russia, India & China

• 25% of the world's land coverage

• 40% of the world's population

• Hold a combined GDP of 15.435 Tdollars

– Oleochemical Hub within the ASEAN region

• Industry Actions required for

– The introduction of new Regulations such as

REACH, etc

– To meet Renewability requirement of the

Oleochemical Industry

– Sustainability for growth (more environmental

friendly)

• Oleochemical vs Petrochemical

– Growing new markets for green-based chemicals


Challenges & Opportunities Ahead (2)

• The challenge for the oleo-chemical players is to deliver innovative,

sustainable products that

– Are Safe for the Consumers

– Are Environmentally friendly & Biodegradable

– Are Cost effective (Value for money factors )

– Include performance of each ingredient

– Have a program of continuous Product Development

– Have processing and manufacturing efficiency

• Future development influences :

– Effects on raw materials, i.e., world capacity growth for the oleo basics

– Manufacturers are currently struggling with issues of oversupply, declining profit margins and problems related to de-formulation.

– Directives such as Detergent Directive and Dangerous Substances Directive, together with increasing consumer awareness are obliging manufacturers to produce biodegradable products.


Ex. of Green Chemicals: Bio-lubricants

It is expected that by 2030 – 30% of lubricants are expected to be bio-degradable

SUSTAINABILITY


THE WAY FORWARD

� To deal with potential competition from South America & Africa

— More R&D to increase yield of palm

— Increase efficiency of cultivation while reducing dependency

on manual labor

� Down-streaming as one of the ways to stay on top of the game

in this industry

— As palm oil is considered rich in nutrients, the industry has to

think in terms of high-grade derivatives, use of biomass and

nutraceuticals, etc, to remain in the forefront.

� A different growth strategy in the industry

— Instead of expanding land area for cultivation, plantation

owners could think of high-tech approaches in developing

the industry

Thank you for your attention

By:

Dr. Surina Ismail

Global Director, IP Management

All Rights ReservedICOC 2010 – Oct 25 - 27

Anti-Dumping Article 5 Investigation

• Under what circumstances can anti-

dumping measures be imposed?

• The investigation must show that:

1. there is dumping by the exporting

producers in the country/countries

concerned

2. material injury has been suffered

by the Community industry

concerned

3. there is a causal link between the

dumping and injury found

4. the imposition of measures is not

against the Community interest.

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