ENCOURAGING LOCAL KNOW-HOW: Govt raises bonus tariff to 5 sen/kWh from 1 sen/kWh
PUTRAJAYA: The government has allocated 25MW (megawatt), or 39 per cent, of this year’s 65MW renewable energy (RE) quota to biomass and biogas operators, said Sustainable Energy Development Authority (Seda) chief executive officer Badriyah Abdul Malek.
Up
until last year, biomass and biogas made up 37 per cent of the 536MW RE
quota. Oil palm biomass and biogas plant operators, which had
successfully bid for the RE quota and accorded licences by Seda, will
receive 32 sen/kWh (kilowatt per hour) under the feed-in tariff (FiT)
when they hook up to the national grid.
In encouraging the use of local engineering know-how, the government has raised the bonus tariff to five sen/kWh from one sen/kWh, Badriyah said after Seda’s public briefing on the RE licence bidding process, here, yesterday.
This means a qualified biomass operator supplying RE to the power grid should be able to receive 37 sen/kWh if he uses local gas engine technology, Badriyah explained.
She highlighted to prospective RE producers that online bidding for the right to apply for RE quota opens on May 2 from 4pm onwards.
The FiT essentially guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. Power generated from sustainable sources that will benefit from FiT include that of oil palm biomass, biogas, small hydro and solar.
Like previous years, a prospective RE producer will have to bid for the right to apply for the FiT and this is done via online so as to ensure a transparent application process. The online FiT application is available from May 2.
RE producers need to go online and bid for the relevant FiT rate as the FiT rate differs for different RE technologies and installed capacities.
RE producers then apply for a licence from Seda through its website at seda.gov.my. In applying for a FiT approval, the prospective RE producer needs to submit the work plan for the RE installation/plant.
Once the FiT is granted, Seda will closely monitor each RE installation until commencement date is achieved. This is to prevent the applicant from monopolising the RE quota.
Once a FiT application has been approved, a portion of the RE fund will be automatically allocated to the approved applicant. To avoid any monopolisation of the RE quota, Badriyah noted Seda’s online system will track the RE installation/plant’s milestones via the submitted work plan.
If any delays are detected, a notice will be sent to the applicant to request for an explanation for the delay. If the applicant fails to respond satisfactorily, then the application will be revoked.
When that happens, the fund committed to the applicant will be released, and this will return the allocated quota to the system. “This is to prevent any abuse of the FiT system and to allow other interested parties to apply for it,” Badriyah said.
PUTRAJAYA: The government has allocated 25MW (megawatt), or 39 per cent, of this year’s 65MW renewable energy (RE) quota to biomass and biogas operators, said Sustainable Energy Development Authority (Seda) chief executive officer Badriyah Abdul Malek.
In encouraging the use of local engineering know-how, the government has raised the bonus tariff to five sen/kWh from one sen/kWh, Badriyah said after Seda’s public briefing on the RE licence bidding process, here, yesterday.
This means a qualified biomass operator supplying RE to the power grid should be able to receive 37 sen/kWh if he uses local gas engine technology, Badriyah explained.
She highlighted to prospective RE producers that online bidding for the right to apply for RE quota opens on May 2 from 4pm onwards.
The FiT essentially guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. Power generated from sustainable sources that will benefit from FiT include that of oil palm biomass, biogas, small hydro and solar.
Like previous years, a prospective RE producer will have to bid for the right to apply for the FiT and this is done via online so as to ensure a transparent application process. The online FiT application is available from May 2.
RE producers need to go online and bid for the relevant FiT rate as the FiT rate differs for different RE technologies and installed capacities.
RE producers then apply for a licence from Seda through its website at seda.gov.my. In applying for a FiT approval, the prospective RE producer needs to submit the work plan for the RE installation/plant.
Once the FiT is granted, Seda will closely monitor each RE installation until commencement date is achieved. This is to prevent the applicant from monopolising the RE quota.
Once a FiT application has been approved, a portion of the RE fund will be automatically allocated to the approved applicant. To avoid any monopolisation of the RE quota, Badriyah noted Seda’s online system will track the RE installation/plant’s milestones via the submitted work plan.
If any delays are detected, a notice will be sent to the applicant to request for an explanation for the delay. If the applicant fails to respond satisfactorily, then the application will be revoked.
When that happens, the fund committed to the applicant will be released, and this will return the allocated quota to the system. “This is to prevent any abuse of the FiT system and to allow other interested parties to apply for it,” Badriyah said.
Palm oil to recover
BANGI, Selangor: Palm
oil, which is currently trading at around RM2,600 per tonne, is
sizeably undervalued and is set to recover, a top edible oils analyst
said yesterday.
Hamburg-based Oil World executive director Thomas Mielke believes that palm oil prices have reached the floor and are set to recover in the months ahead, probably reaching or surpassing RM2,900 per tonne.
“Last year’s price lows of around RM2,300 per tonne are now fluctuating in higher territory, partly because of a considerably increased biofuels mandate in Indonesia, which will probaly lead to a trebling of Indonesian domestic biodiesel consumption this year,” he said.
In the last two weeks, palm oil traded at a premium to the South American soya oil. The world is actually facing tight supplies of palm oil, which Mielke estimates to rise by only 1.8 million tonnes in October to September 2013/14 season, compared with a year-on-year growth of 4.8 million tonnes previously.
He said prolonged drought in many parts of Indonesia, Malaysia and Thailand have stressed the trees and will result in lower- than-expected production in October-December 2014 as well as in 2015 and 2016.
“Weathermen see a 70 per cent risk of El Nino conditions occurring later in 2014, which would further complicate an already tight situation,” Mielke told a forum organised by the Malaysian Palm Oil Board (MPOB), here, yesterday.
“This season, world exports of palm oil will decline for the first time in 16 years. Some relief will come from higher world production and exports of seed oils, primarily soya oil and sunflower oil,” he said.
Mielke
noted that global edible oil stocks are running low and are down by two
million tonnes from last year, primarily in Indonesia, Malaysia, the
United States and India.
“At present, palm oil prices of US$900 (RM2,907) per tonne in Rotterdam is not reflective of the fundamentals. I think palm oil still has room to appreciate to or above US$1,000. For 2014, the price average will probably reach US$970 per tonne in Rotterdam,” he said.
He stressed that the oil palm industry must continue its focus on yield improvement to overcome the gap between actual and potential yields.
“Palm oil is the most important vegetable oil in the world. Together with palm kernel oil, they satisfy one-third of the world’s consumption and make up 63 per cent of the world’s exports of edible oils and fats. This substantial amount of palm oil is produced on only six per cent of the world’s oil crop area."
"There is an urgent need to improve the logistics and supply channels so as to satisfy demand of consumers worldwide in a timely manner,” he said.
“Oil palm is the highest-yielding of all oil crops, as it is able to produce about four to five tonnes of palm oil per hectare in a year. Attacks by these NGO (non-governmental organisation) big boys show that they do not understand the significance of palm oil to the daily diet of consumers all over the world, particularly in developing nations,” he said.
He said last year, the world’s production of palm oil amounted to 56.2 million tonnes, while consumption jumped to 57.3 million tonnes, adding that the world needs an additional five to six million tonnes of edible oils and fats every year.
“Indonesia and Malaysia must not be complacent. By 2020, palm oil output will have to reach at least 78 million tonnes to satisfy the daily oils and fats need of an increasing global population. The world needs to plant more high-yielding oil palms,” he added.
Hamburg-based Oil World executive director Thomas Mielke believes that palm oil prices have reached the floor and are set to recover in the months ahead, probably reaching or surpassing RM2,900 per tonne.
“Last year’s price lows of around RM2,300 per tonne are now fluctuating in higher territory, partly because of a considerably increased biofuels mandate in Indonesia, which will probaly lead to a trebling of Indonesian domestic biodiesel consumption this year,” he said.
In the last two weeks, palm oil traded at a premium to the South American soya oil. The world is actually facing tight supplies of palm oil, which Mielke estimates to rise by only 1.8 million tonnes in October to September 2013/14 season, compared with a year-on-year growth of 4.8 million tonnes previously.
He said prolonged drought in many parts of Indonesia, Malaysia and Thailand have stressed the trees and will result in lower- than-expected production in October-December 2014 as well as in 2015 and 2016.
“Weathermen see a 70 per cent risk of El Nino conditions occurring later in 2014, which would further complicate an already tight situation,” Mielke told a forum organised by the Malaysian Palm Oil Board (MPOB), here, yesterday.
“This season, world exports of palm oil will decline for the first time in 16 years. Some relief will come from higher world production and exports of seed oils, primarily soya oil and sunflower oil,” he said.
“At present, palm oil prices of US$900 (RM2,907) per tonne in Rotterdam is not reflective of the fundamentals. I think palm oil still has room to appreciate to or above US$1,000. For 2014, the price average will probably reach US$970 per tonne in Rotterdam,” he said.
He stressed that the oil palm industry must continue its focus on yield improvement to overcome the gap between actual and potential yields.
“Palm oil is the most important vegetable oil in the world. Together with palm kernel oil, they satisfy one-third of the world’s consumption and make up 63 per cent of the world’s exports of edible oils and fats. This substantial amount of palm oil is produced on only six per cent of the world’s oil crop area."
"There is an urgent need to improve the logistics and supply channels so as to satisfy demand of consumers worldwide in a timely manner,” he said.
“Oil palm is the highest-yielding of all oil crops, as it is able to produce about four to five tonnes of palm oil per hectare in a year. Attacks by these NGO (non-governmental organisation) big boys show that they do not understand the significance of palm oil to the daily diet of consumers all over the world, particularly in developing nations,” he said.
He said last year, the world’s production of palm oil amounted to 56.2 million tonnes, while consumption jumped to 57.3 million tonnes, adding that the world needs an additional five to six million tonnes of edible oils and fats every year.
“Indonesia and Malaysia must not be complacent. By 2020, palm oil output will have to reach at least 78 million tonnes to satisfy the daily oils and fats need of an increasing global population. The world needs to plant more high-yielding oil palms,” he added.
Sarawak balances the needs of people, planet & profits
This is written by my colleague Dennis Wong at Kuching bureau.
IN A DILEMMA: State leaders defend land use despite NGOs’ increasing false allegations over lack of orangutan’s habitat
SARAWAK is the last frontier for the pongo pygmaeus or orangutan and it is the state's responsibility to ensure this species is well protected for the next generation.
Studies have shown that more than 3,000 were sighted in the state and most were in the Lanjak Entimau Wildlife Sanctuary and the Batang Ai National Park, particularly in Nanga Delok. Despite the state's ambitious move towards becoming an industrialised state, Sarawak is putting aside one million hectares as a "Totally Protected Area" and it is at 799,627.7ha, about 80 per cent of the target.
Among areas designated include 182,983ha in Lanjak Entimau Wildlife Sanctuary, which is also the natural habitat for the orangutan. It was initially gazetted, covering three divisions -- Sarikei, Sibu and Kapit -- 31 years ago in 1983, with an area of 168,758ha and later extended to another 14,225ha last year. Batang Ai, on the other hand, is one of the state's national parks, covering 20,040ha.
Sarawak has a land mass of nearly 12,445,000ha, where almost 65 per cent of the area are hill forests, 20 per cent secondary forests, 10 per cent peat swamp forests and five per cent mangrove forests. Some 20 per cent of these land masses also include cities, smaller towns, scattered villages and oil palm plantations.
Second
Resource Planning and Environment Minister Datuk Awang Tengah Ali
Hassan said no logging was allowed in any of these designated areas,
which include wildlife sanctuaries, national parks and nature reserves.
"We have also decided to put aside no fewer than six million hectares of land for permanent forests," he said at the recent launch of the state-level World Wildlife Day celebration.
Despite harsh non-governmental organisation attacks over the state's management of its nature, the state government is holding close to its forests management and conservation programmes.
"More than 80 per cent of our land mass is under forest cover and, on the contrary, some developed countries in the west have no more than 10 per cent of forests cover," said Awang Tengah.
Some non-governmental organisations (NGOs) have alleged that logging and oil palm cultivation have affected the orangutan habitat and, in December 2013, he noted Singapore-based Wilmar International Ltd signed a "No Deforestation, No Peat, No Exploitation" pledge in its palm oil trade with consumer goods giant Unilever Plc.
Wilmar's refinery in Bintulu is the main buyer from 41 palm oil mills across the state, absorbing 1.7 million tonnes of crude palm oil (CPO) or 55 per cent of the state's production. This move also affects nearly 19,000 smallholder participants of the poverty eradication programme with an estimated annual return of RM3,328 per hectare.
Land Development Minister Tan Sri James Jemut Masing likened Wilmar's action as unreasonable prohibitions on its palm oil suppliers akin to economic bullying, adding that this directive was disastrous as it could jeopardise the government's poverty eradication programmes.
"The state government will not succumb to baseless allegations and I do not agree with the argument that planting oil palms in logged-over areas and peat swamp is bad for the environment. Oil palm planters in Sarawak follow a set of proven good agricultural practices that balances the needs of people, planet and profits," said Masing in a recent interview.
After a strong stance from the state, Wilmar conceded and its chairman and chief executive officer Kuok Khoon Hong assured that the company's policy would not affect CPO purchases from oil palm that had already developed large tracts of peat land.
Tengah and Masing were right to stand firm against these illogical attacks over the state's nature management. Indeed, wildlife must be protected; one must not forget that humans living on these lands also need to improve their lives so they can move forward.
Perhaps oil palm plantations are not as majestic looking as the vineyards of Europe, but these trees grow better here and provide better yields for the farmers.
IN A DILEMMA: State leaders defend land use despite NGOs’ increasing false allegations over lack of orangutan’s habitat
SARAWAK is the last frontier for the pongo pygmaeus or orangutan and it is the state's responsibility to ensure this species is well protected for the next generation.
Studies have shown that more than 3,000 were sighted in the state and most were in the Lanjak Entimau Wildlife Sanctuary and the Batang Ai National Park, particularly in Nanga Delok. Despite the state's ambitious move towards becoming an industrialised state, Sarawak is putting aside one million hectares as a "Totally Protected Area" and it is at 799,627.7ha, about 80 per cent of the target.
Among areas designated include 182,983ha in Lanjak Entimau Wildlife Sanctuary, which is also the natural habitat for the orangutan. It was initially gazetted, covering three divisions -- Sarikei, Sibu and Kapit -- 31 years ago in 1983, with an area of 168,758ha and later extended to another 14,225ha last year. Batang Ai, on the other hand, is one of the state's national parks, covering 20,040ha.
Sarawak has a land mass of nearly 12,445,000ha, where almost 65 per cent of the area are hill forests, 20 per cent secondary forests, 10 per cent peat swamp forests and five per cent mangrove forests. Some 20 per cent of these land masses also include cities, smaller towns, scattered villages and oil palm plantations.
"We have also decided to put aside no fewer than six million hectares of land for permanent forests," he said at the recent launch of the state-level World Wildlife Day celebration.
Despite harsh non-governmental organisation attacks over the state's management of its nature, the state government is holding close to its forests management and conservation programmes.
"More than 80 per cent of our land mass is under forest cover and, on the contrary, some developed countries in the west have no more than 10 per cent of forests cover," said Awang Tengah.
Some non-governmental organisations (NGOs) have alleged that logging and oil palm cultivation have affected the orangutan habitat and, in December 2013, he noted Singapore-based Wilmar International Ltd signed a "No Deforestation, No Peat, No Exploitation" pledge in its palm oil trade with consumer goods giant Unilever Plc.
Wilmar's refinery in Bintulu is the main buyer from 41 palm oil mills across the state, absorbing 1.7 million tonnes of crude palm oil (CPO) or 55 per cent of the state's production. This move also affects nearly 19,000 smallholder participants of the poverty eradication programme with an estimated annual return of RM3,328 per hectare.
Land Development Minister Tan Sri James Jemut Masing likened Wilmar's action as unreasonable prohibitions on its palm oil suppliers akin to economic bullying, adding that this directive was disastrous as it could jeopardise the government's poverty eradication programmes.
"The state government will not succumb to baseless allegations and I do not agree with the argument that planting oil palms in logged-over areas and peat swamp is bad for the environment. Oil palm planters in Sarawak follow a set of proven good agricultural practices that balances the needs of people, planet and profits," said Masing in a recent interview.
After a strong stance from the state, Wilmar conceded and its chairman and chief executive officer Kuok Khoon Hong assured that the company's policy would not affect CPO purchases from oil palm that had already developed large tracts of peat land.
Tengah and Masing were right to stand firm against these illogical attacks over the state's nature management. Indeed, wildlife must be protected; one must not forget that humans living on these lands also need to improve their lives so they can move forward.
Perhaps oil palm plantations are not as majestic looking as the vineyards of Europe, but these trees grow better here and provide better yields for the farmers.
Boustead Plantations set to raise RM928m
PETALING JAYA: Boustead
Plantations Bhd’s initial public offering (IPO) is expected to raise
close to RM1 billion, said Boustead Holdings Bhd deputy chairman and
group managing director Tan Sri Lodin Wok Kamaruddin.
“We have received shareholders’ approval for the listing of Boustead Plantations,” he said at a briefing, here, yesterday. “Based on an indicative offer price of RM1.60 a share, the IPO should be able to raise RM928 million. The listing is slated for mid-June. As of now, there are no cornerstone investors,” Lodin said.
He noted that the Boustead Plantations IPO is timely because the price of crude palm oil (CPO) is on the uptrend. “At the moment, CPO price is averaging RM2,675 per tonne. In view of the Ramadan month starting in June, palm cooking oil buyers from Muslim nations are set to stock up on this kitchen staple in preparation for the Aidilfitri celebration. This is set to boost CPO prices,” he said.
It was reported that Boustead Plantations will be selling up to 41 per cent of its shares, of which 10 per cent is for institutional investors and 31 per cent for retail subscription.
In July 2013, Boustead Holdings Bhd paid RM2.30 a share for the 46.6 per cent it did not already own in Al-Hadharah REIT. After the corporate move, Boustead Plantations now controls 83,636ha of oil palm estates and 10 mills across Malaysia.
Boustead Holdings group finance director Daniel Ebinesan, who was present at the briefing, said the group borrowed close to RM600 million to take Al-Hadharah REIT private. “Following the Boustead Plantations IPO, we hope to channel RM390 million of the funds raised to repay a portion of this bank borrowing,” he said.
Currently, Boustead Plantations has planted up 71,092.7ha, some 85 per cent of its landbank.
On its growth prospects, Lodin said about RM420 million, or 45 per cent, of the IPO proceeds will be set a side to buy earnings accretive, mature plantation estates in Malaysia.
“We’ll put aside RM420 million to expand our plantation landbank. Although we do not rule out overseas expansion in the long term, our immediate focus is within Malaysia,” he said.
In raising productivity at its oil palm plantations, Lodin noted that the group will replant old trees with higher-yielding planting materials supplied by its associate Applied Agricultural Resources Sdn Bhd (AAR).
AAR, an equal joint-venture between Boustead Plantations and Kuala Lumpur Kepong Bhd (KLK), started breeding high-yielding hybrids on experimental plots more than 25 years ago.
At prime fruit-bearing age, AAR’s semi-clonal seedlings, grown under good management and environment, are capable of producing more than 30 tonnes of fresh fruit bunches with over 23 per cent oil extraction rate. That works out to about seven tonnes of oil per hectare in a year, almost two times higher than the country’s average yield.
Like their peers, Boustead Plantations and KLK have invested heavily in oil palm breeding and cloning. High density planting and usage of semi-clonal materials will enable these companies to get better oil yields -- consistently.
“We started high-density replanting in 2008. When we replant with these compact hybrids, we can pack in between 148 and 160 trees in one hectare instead of the national standard of 136. With more optimal fertiliser application, these semi-clonals can help raise yields at our estates by at least 10 per cent,” Lodin said.
“We have received shareholders’ approval for the listing of Boustead Plantations,” he said at a briefing, here, yesterday. “Based on an indicative offer price of RM1.60 a share, the IPO should be able to raise RM928 million. The listing is slated for mid-June. As of now, there are no cornerstone investors,” Lodin said.
He noted that the Boustead Plantations IPO is timely because the price of crude palm oil (CPO) is on the uptrend. “At the moment, CPO price is averaging RM2,675 per tonne. In view of the Ramadan month starting in June, palm cooking oil buyers from Muslim nations are set to stock up on this kitchen staple in preparation for the Aidilfitri celebration. This is set to boost CPO prices,” he said.
It was reported that Boustead Plantations will be selling up to 41 per cent of its shares, of which 10 per cent is for institutional investors and 31 per cent for retail subscription.
In July 2013, Boustead Holdings Bhd paid RM2.30 a share for the 46.6 per cent it did not already own in Al-Hadharah REIT. After the corporate move, Boustead Plantations now controls 83,636ha of oil palm estates and 10 mills across Malaysia.
Boustead Holdings group finance director Daniel Ebinesan, who was present at the briefing, said the group borrowed close to RM600 million to take Al-Hadharah REIT private. “Following the Boustead Plantations IPO, we hope to channel RM390 million of the funds raised to repay a portion of this bank borrowing,” he said.
On its growth prospects, Lodin said about RM420 million, or 45 per cent, of the IPO proceeds will be set a side to buy earnings accretive, mature plantation estates in Malaysia.
“We’ll put aside RM420 million to expand our plantation landbank. Although we do not rule out overseas expansion in the long term, our immediate focus is within Malaysia,” he said.
In raising productivity at its oil palm plantations, Lodin noted that the group will replant old trees with higher-yielding planting materials supplied by its associate Applied Agricultural Resources Sdn Bhd (AAR).
AAR, an equal joint-venture between Boustead Plantations and Kuala Lumpur Kepong Bhd (KLK), started breeding high-yielding hybrids on experimental plots more than 25 years ago.
At prime fruit-bearing age, AAR’s semi-clonal seedlings, grown under good management and environment, are capable of producing more than 30 tonnes of fresh fruit bunches with over 23 per cent oil extraction rate. That works out to about seven tonnes of oil per hectare in a year, almost two times higher than the country’s average yield.
Like their peers, Boustead Plantations and KLK have invested heavily in oil palm breeding and cloning. High density planting and usage of semi-clonal materials will enable these companies to get better oil yields -- consistently.
“We started high-density replanting in 2008. When we replant with these compact hybrids, we can pack in between 148 and 160 trees in one hectare instead of the national standard of 136. With more optimal fertiliser application, these semi-clonals can help raise yields at our estates by at least 10 per cent,” Lodin said.
COFCO pay US$1.5 billion for Noble's agribusiness
This is written by Naveen Thukral and Michael Flaherty. Photograph credit goes to Bobby Yip.
SINGAPORE (Reuters) - China's largest grain trader COFCO Corp has agreed to pay US$1.5 billion for a majority stake in Noble Group Ltd's agribusiness, its second acquisition in less than two months.
The two companies plan to form a joint venture, in which COFCO will own 51 per cent, to link its grain processing and distribution business in China with Noble Agri's grain sourcing and trading arms, the firms said yesterday.
The move will help China develop a powerful agricultural trading house along the lines of its Unipec oil trading business - one of the world's biggest buyers of crude oil - as it seeks to shore up supplies of animal feed grains to meet soaring demand for high-protein food.
"We can source ample, and low-cost, grains by direct purchases from farmers in major grain-growing countries," said Cheng Guo Qiang, a researcher with the State Council Development and Research Center, the think-tank of China's cabinet.
COFCO's participation in the global grain trade will also help China better track the world grain market, Cheng added.
Noble's share price on the Singapore stock exchange - which jumped as much as 5 per cent yesterday - has risen nearly 25 per cent since March 4, when Reuters broke the news that COFCO was in acquisition talks with it, adding about S$2 billion in market value. This deal is seen to add volume to Noble's trading business via COFCO and allows it to reduce debt.
China is seeing massive expansion in demand for grains such as soybeans and corn, as the growing ranks of its middle class demand more meat in their diet.
COFCO bought a 51-per cent stake in Dutch trader Nidera in February 2014 to gain direct access to South American grain and oilseed supplies in a deal that valued Nidera at US$4 billion including debt.
The Noble and Nidera deals mark the biggest overseas acquisitions in China's grain sector, with a combined US$2.8 billion investment, COFCO said in a statement.
The company will own high-quality assets in the world's top grain and vegetable oil producing regions, including Brazil, Argentina, Indonesia and the Black Sea area, following these deals, COFCO said.
The deals follow a wave of consolidation in the world agribusiness sector that has shrunk the number of potential acquisitions for it to bulk up enough to compete globally with the larger ABCD rivals, namely; ArcherDanielsMidland Co, Bunge Ltd, Cargill Inc and Louis Dreyfus Corp.
The
Noble acquisition allows COFCO to bring food supply into China without
having to go through the ABCD pipeline, and will allow it to control
costs better.
"By pushing the international strategy, COFCO will set up a stable grain corridor between the largest global grain-growing origins and the biggest global emerging market, in terms of grain consumption growth in Asia," COFCO chairman Frank Ning Gao Ning said in a statement.
Noble's grains and oilseeds operations focus on South America, Europe and Asia. It operates three oilseed processing factories in Asia, and supplies grains, oilseeds, vegetable oil and by-products throughout the region from Singapore.
Noble, which is 14 per cent owned by sovereign wealth fund China Investment Corp, also trades sugar, coffee and raw materials, such as iron ore. Its agricultural division is the smallest, and generated revenue of US$15.5 billion last fiscal year, accounting for about 16 per cent of the firm's total.
Under the terms of the deal, COFCO's US$1.5 billion offer serves as an initial cash payment upon closing, expected in the third or fourth quarter. The final price will depend on a multiple based on Noble Agri's year-end book value and its debt will be rolled into the joint venture.
A consortium led by China-focused private equity firm Hopu will join COFCO as a minority investor in the acquisition and will hold a third of the investment vehicle making the purchase. Hopu is a private equity fund backed by Singapore state investor Temasek and run by the well known Chinese banker Fang Feng Lei, with whom Goldman Sachs partnered for its China joint venture.
The final price COFCO pays will be 1.15 times the audited book value of the agribusiness division - factoring in COFCO's 51 per cent ownership - for the financial year ending December 2014, according to the Noble statement. The audited book value was US$2.8 billion by December 2013, it said.
COFCO and Noble still need to obtain regulatory and shareholder approval for the deal. JP Morgan was sole financial adviser to Noble while Morgan Stanley advised the consortium that includes COFCO and Hopu.
SINGAPORE (Reuters) - China's largest grain trader COFCO Corp has agreed to pay US$1.5 billion for a majority stake in Noble Group Ltd's agribusiness, its second acquisition in less than two months.
The two companies plan to form a joint venture, in which COFCO will own 51 per cent, to link its grain processing and distribution business in China with Noble Agri's grain sourcing and trading arms, the firms said yesterday.
The move will help China develop a powerful agricultural trading house along the lines of its Unipec oil trading business - one of the world's biggest buyers of crude oil - as it seeks to shore up supplies of animal feed grains to meet soaring demand for high-protein food.
"We can source ample, and low-cost, grains by direct purchases from farmers in major grain-growing countries," said Cheng Guo Qiang, a researcher with the State Council Development and Research Center, the think-tank of China's cabinet.
COFCO's participation in the global grain trade will also help China better track the world grain market, Cheng added.
Noble's share price on the Singapore stock exchange - which jumped as much as 5 per cent yesterday - has risen nearly 25 per cent since March 4, when Reuters broke the news that COFCO was in acquisition talks with it, adding about S$2 billion in market value. This deal is seen to add volume to Noble's trading business via COFCO and allows it to reduce debt.
China is seeing massive expansion in demand for grains such as soybeans and corn, as the growing ranks of its middle class demand more meat in their diet.
COFCO bought a 51-per cent stake in Dutch trader Nidera in February 2014 to gain direct access to South American grain and oilseed supplies in a deal that valued Nidera at US$4 billion including debt.
The Noble and Nidera deals mark the biggest overseas acquisitions in China's grain sector, with a combined US$2.8 billion investment, COFCO said in a statement.
The company will own high-quality assets in the world's top grain and vegetable oil producing regions, including Brazil, Argentina, Indonesia and the Black Sea area, following these deals, COFCO said.
The deals follow a wave of consolidation in the world agribusiness sector that has shrunk the number of potential acquisitions for it to bulk up enough to compete globally with the larger ABCD rivals, namely; ArcherDanielsMidland Co, Bunge Ltd, Cargill Inc and Louis Dreyfus Corp.
"By pushing the international strategy, COFCO will set up a stable grain corridor between the largest global grain-growing origins and the biggest global emerging market, in terms of grain consumption growth in Asia," COFCO chairman Frank Ning Gao Ning said in a statement.
Noble's grains and oilseeds operations focus on South America, Europe and Asia. It operates three oilseed processing factories in Asia, and supplies grains, oilseeds, vegetable oil and by-products throughout the region from Singapore.
Noble, which is 14 per cent owned by sovereign wealth fund China Investment Corp, also trades sugar, coffee and raw materials, such as iron ore. Its agricultural division is the smallest, and generated revenue of US$15.5 billion last fiscal year, accounting for about 16 per cent of the firm's total.
Under the terms of the deal, COFCO's US$1.5 billion offer serves as an initial cash payment upon closing, expected in the third or fourth quarter. The final price will depend on a multiple based on Noble Agri's year-end book value and its debt will be rolled into the joint venture.
A consortium led by China-focused private equity firm Hopu will join COFCO as a minority investor in the acquisition and will hold a third of the investment vehicle making the purchase. Hopu is a private equity fund backed by Singapore state investor Temasek and run by the well known Chinese banker Fang Feng Lei, with whom Goldman Sachs partnered for its China joint venture.
The final price COFCO pays will be 1.15 times the audited book value of the agribusiness division - factoring in COFCO's 51 per cent ownership - for the financial year ending December 2014, according to the Noble statement. The audited book value was US$2.8 billion by December 2013, it said.
COFCO and Noble still need to obtain regulatory and shareholder approval for the deal. JP Morgan was sole financial adviser to Noble while Morgan Stanley advised the consortium that includes COFCO and Hopu.
Nod for Boustead Plantations IPO
KUALA LUMPUR:
BOUSTEAD Holdings Bhd (BHB) shareholders and previous unitholders of
Al-Hadharah Boustead REIT can soon apply for the Boustead Plantations
Bhd's (BPB) restricted offer, without balloting.
BHB said yesterday the Securities Commission had approved of BPB's initial public offering (IPO) which is slated for listing in the second quarter of this year.
About 28 per cent of BPB, or 163.6 million shares, will be allocated to institutional investors and the rest for retail investors.
The retail tranche consists of 492.4 million shares, of which 42 per cent will be allocated to BHB shareholders and 35 per cent to previous Boustead REIT investors.
Basically,
the restricted offer is fixed at three BPB shares for every five
Boustead REIT shares and one BPB share for every five BHB shares.
BHB said those who apply for at least 100 shares will be guaranteed an allocation of 100 shares.
Any remaining shares will be allocated to entitled BHB shareholders who apply in excess of 100 shares, on a pro-rata basis according to their respective shareholdings in BHB as per the entitlement date to be announced later.
"BPB's listing will allow us to unlock the value of our investments. Existing BHP shareholders and potential new shareholders will have the opportunity to take part in our good track record of delivering sustained earnings," said BHB deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.
Upon listing, BPB's total enlarged and paid-up share capital will comprise 1.6 billion shares amounting to RM800 million. BPB is selling up to 656 million shares of its enlarged 1.6 billion share base, comprising 580 new million shares and 76 million existing shares offered by its parent.
Lodin said parent BHB will keep a controlling 59 per cent stake in BPB, which has committed a dividend payout of at least 60 per cent of its profit.
So far, BPB's IPO is the only palm oil-linked listing slated for the year. As palm oil prices are on the uptrend, keen investor interests are expected on pure plantation counters such as BPB.
In terms of tree age profile, BPB's mature and maturing trees, which are between four and 20 years old, make up 77 per cent of its planted area. Immature oil palms of between zero and three years make up nine per cent of its planted area and the balance 13.8 per cent are trees that are past their prime.
To stem any decline in its fresh fruit bunch output, Lodin said in five years, BPB will seek to grow its 71,092.7ha planted area by another 20,000ha.
BHB said yesterday the Securities Commission had approved of BPB's initial public offering (IPO) which is slated for listing in the second quarter of this year.
About 28 per cent of BPB, or 163.6 million shares, will be allocated to institutional investors and the rest for retail investors.
The retail tranche consists of 492.4 million shares, of which 42 per cent will be allocated to BHB shareholders and 35 per cent to previous Boustead REIT investors.
BHB said those who apply for at least 100 shares will be guaranteed an allocation of 100 shares.
Any remaining shares will be allocated to entitled BHB shareholders who apply in excess of 100 shares, on a pro-rata basis according to their respective shareholdings in BHB as per the entitlement date to be announced later.
"BPB's listing will allow us to unlock the value of our investments. Existing BHP shareholders and potential new shareholders will have the opportunity to take part in our good track record of delivering sustained earnings," said BHB deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.
Upon listing, BPB's total enlarged and paid-up share capital will comprise 1.6 billion shares amounting to RM800 million. BPB is selling up to 656 million shares of its enlarged 1.6 billion share base, comprising 580 new million shares and 76 million existing shares offered by its parent.
Lodin said parent BHB will keep a controlling 59 per cent stake in BPB, which has committed a dividend payout of at least 60 per cent of its profit.
So far, BPB's IPO is the only palm oil-linked listing slated for the year. As palm oil prices are on the uptrend, keen investor interests are expected on pure plantation counters such as BPB.
In terms of tree age profile, BPB's mature and maturing trees, which are between four and 20 years old, make up 77 per cent of its planted area. Immature oil palms of between zero and three years make up nine per cent of its planted area and the balance 13.8 per cent are trees that are past their prime.
To stem any decline in its fresh fruit bunch output, Lodin said in five years, BPB will seek to grow its 71,092.7ha planted area by another 20,000ha.
Palm oil millers' input sought for RE roadmap
PETALING JAYA: THE
government is seeking palm oil millers' input to formulate a new
renewable energy (RE) roadmap that will see more participation from
biomass and biogas plant operators.
Palm oil millers are seen to be practical enablers in using more homegrown technology and content.
"The National RE Policy and Action Plan 2009 is due for a revision to chart the way forward. Currently, the biggest allocation of RE quota goes to solar power but this sector is highly dependent on foreign technology and imports," said Sustainable Energy Development Authority (Seda) chief executive officer Badriyah Abdul Malek.
"There's
a need to re-focus the RE industry to add more value to our economy. In
moving towards a knowledge-based and service-oriented economy, we want
to encourage more use of local technology and content. We see palm oil
millers as key enablers of this vision," she said.
Energy, Green Technology and Water Deputy Minister Datuk Seri Mahdzir Khalid had earlier officiated at the Second International Sustainable Energy Summit 2014, here, yesterday.
Seda, a government agency under the ministry, is a one-stop centre that facilitates supply and RE usage in Malaysia via feed-in tariff (FiT).
The FiT guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. Power generated from renewable sources, such as oil palm biomass, biogas, mini-hydro and solar, are targeted to benefit from the FiT.
Currently, biomass and biogas only make up 37 per cent of the 536MW RE quota that had been allocated. Oil palm biomass and biogas plant operators, which had successfully bid for the RE quota and accorded licences by Seda, receive 32 sen per kWh under the FiT when they hook up to the national grid.
While acknowledging the sluggish take-up rate among biomass and biogas plant operators, Badriyah said the government is committed to re-balance RE developer interest towards this sector.
Asked if the government may raise the FiT for oil palm biomass and biogas plant operators, she replied: "We're looking to revise the FiT degression rates and bonus incentives." Mahdzir confirmed that changes to the FiT will be announced in the next quarter.
Degression rates reflect the falling cost of technologies, while bonus incentives spur developers to incorporate more homegrown know-how and local building materials in RE production.
Given the relatively limited FiT budget, which is funded by a 1.6 per cent levy on electricity bills of heavy users in Peninsular Malaysia and Sabah, Badriyah said it would be more realistic to spur more participation from the biomass and biogas sector.
Palm oil millers are seen to be practical enablers in using more homegrown technology and content.
"The National RE Policy and Action Plan 2009 is due for a revision to chart the way forward. Currently, the biggest allocation of RE quota goes to solar power but this sector is highly dependent on foreign technology and imports," said Sustainable Energy Development Authority (Seda) chief executive officer Badriyah Abdul Malek.
Energy, Green Technology and Water Deputy Minister Datuk Seri Mahdzir Khalid had earlier officiated at the Second International Sustainable Energy Summit 2014, here, yesterday.
Seda, a government agency under the ministry, is a one-stop centre that facilitates supply and RE usage in Malaysia via feed-in tariff (FiT).
The FiT guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. Power generated from renewable sources, such as oil palm biomass, biogas, mini-hydro and solar, are targeted to benefit from the FiT.
Currently, biomass and biogas only make up 37 per cent of the 536MW RE quota that had been allocated. Oil palm biomass and biogas plant operators, which had successfully bid for the RE quota and accorded licences by Seda, receive 32 sen per kWh under the FiT when they hook up to the national grid.
While acknowledging the sluggish take-up rate among biomass and biogas plant operators, Badriyah said the government is committed to re-balance RE developer interest towards this sector.
Asked if the government may raise the FiT for oil palm biomass and biogas plant operators, she replied: "We're looking to revise the FiT degression rates and bonus incentives." Mahdzir confirmed that changes to the FiT will be announced in the next quarter.
Degression rates reflect the falling cost of technologies, while bonus incentives spur developers to incorporate more homegrown know-how and local building materials in RE production.
Given the relatively limited FiT budget, which is funded by a 1.6 per cent levy on electricity bills of heavy users in Peninsular Malaysia and Sabah, Badriyah said it would be more realistic to spur more participation from the biomass and biogas sector.
Trade coercion on palm oil
MELBOURNE, Australia: ENVIRONMENTAL
non-governmental organisations (NGOs) have, for the past decade, been
pressuring governments to restrict palm oil imports unless production
systems comply with their standards.
Now, commercial coercion joins trade coercion to restrict growth of palm oil trade.
When it comes to commercial coercion, these activists are practised at pressuring consumer goods manufacturers, processors and traders to purchase only palm oil produced according to NGOs' standards. Why go to such lengths?
Commercial coercion works. Major companies fear attacks on their brands. Some chief executives, for example of Unilever, the strongest business backer of the Roundtable on Sustainable Palm Oil (RSPO), even appear to enjoy being lauded by NGOs.
Does trade coercion work? Only if governments allow it to do so. Rules in trade agreements are quite strict.
The restrictions imposed by the European Union on imports of palm oil-based biodiesel are considered by trade experts as wholly in breach of World Trade Organisation (WTO) rules. The United States Environment Protection Agency is considering similar measures. They, too, would breach Malaysia's WTO rights to supply the US market.
It is also probable that efforts by the backers of RSPO to pressure businesses to buy only its certified palm oil breach the Code of Practice attached to the WTO Agreement on Technical Barriers to Trade. It specifies non-governmental certification systems may create unnecessary obstacles to trade. Malaysia can seek to enforce this WTO agreement to ensure this does not occur.
Free trade means businesses are free to compete in foreign markets. The domestic cousin of free trade is free competition.
It
is also clear that environmental NGOs are pressuring businesses, such
as Wilmar, to deal only with palm oil producers whom they endorse. This
is market coercion.
As well as exercising its rights as a member of the WTO to challenge restrictions by others on its palm oil exports, the Malaysian Government is fully entitled to adopt laws or regulations which penalise those who engage in any activity that clamps down the palm oil supply chain and producers' livelihoods.
Normally, free marketers would not advise governments to increase business regulations. But when commercial entities willingly bow to coercion from NGOs to distort trade and markets, it is the consumers and producers who suffer; it is entirely appropriate for governments to adopt regulations which penalise businesses which are complicit in actions that restrict competition.
Alan Oxley is chairman of World Growth, an observer at the United Nations Climate Change Conferences. He formerly served as chairman of the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO.
Now, commercial coercion joins trade coercion to restrict growth of palm oil trade.
When it comes to commercial coercion, these activists are practised at pressuring consumer goods manufacturers, processors and traders to purchase only palm oil produced according to NGOs' standards. Why go to such lengths?
Commercial coercion works. Major companies fear attacks on their brands. Some chief executives, for example of Unilever, the strongest business backer of the Roundtable on Sustainable Palm Oil (RSPO), even appear to enjoy being lauded by NGOs.
Does trade coercion work? Only if governments allow it to do so. Rules in trade agreements are quite strict.
The restrictions imposed by the European Union on imports of palm oil-based biodiesel are considered by trade experts as wholly in breach of World Trade Organisation (WTO) rules. The United States Environment Protection Agency is considering similar measures. They, too, would breach Malaysia's WTO rights to supply the US market.
It is also probable that efforts by the backers of RSPO to pressure businesses to buy only its certified palm oil breach the Code of Practice attached to the WTO Agreement on Technical Barriers to Trade. It specifies non-governmental certification systems may create unnecessary obstacles to trade. Malaysia can seek to enforce this WTO agreement to ensure this does not occur.
Free trade means businesses are free to compete in foreign markets. The domestic cousin of free trade is free competition.
As well as exercising its rights as a member of the WTO to challenge restrictions by others on its palm oil exports, the Malaysian Government is fully entitled to adopt laws or regulations which penalise those who engage in any activity that clamps down the palm oil supply chain and producers' livelihoods.
Normally, free marketers would not advise governments to increase business regulations. But when commercial entities willingly bow to coercion from NGOs to distort trade and markets, it is the consumers and producers who suffer; it is entirely appropriate for governments to adopt regulations which penalise businesses which are complicit in actions that restrict competition.
Alan Oxley is chairman of World Growth, an observer at the United Nations Climate Change Conferences. He formerly served as chairman of the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO.
Oil palm expansion plan continues
KUALA LUMPUR: OIL
palm planters in Sarawak are looking to plant up more of their
agricultural landbank as palm oil prices have started to trade higher
than RM2,700 per tonne this past month.
Last Friday, the third month palm oil futures on Bursa Malaysia Derivative closed at RM2,796 per tonne. Planters welcome the prospects of higher exports, having braved through dismal pricings of between RM2,200 and RM2,500 in the first 10 months of 2013.
“Higher
palm oil prices of around RM2,700 to RM2,800 per tonne this year should
contribute to better export earnings,” said Sarawak Land Development
Minister Tan Sri Dr James Jemut Masing.
He reiterated that Sarawak is steadfast in its commitment to raise the income and living standard of rural folks through oil palm development.
“Sarawak’s oil palm expansion programme will go ahead as planned. The rise in palm oil prices will help generate extra capital for smallholders to expand their oil palm plantings,” he told Business Times in a telephone interview from Kuching yesterday.
Malaysian Palm Oil Board’s data showed that Sarawak produced 3.1 million tonnes of crude palm oil (CPO) last year. “This year, with more trees maturing, we hope to achieve between five and 10 per cent output growth to 3.3 million tonnes,” Masing said.
In December 2013, Wilmar International Ltd signed a “No Deforestation, No Peat, No Exploitation” pledge in its palm oil trade with consumer goods giant Unilever Plc.
Wilmar’s refinery in Bintulu is the main buyer from 41 palm oil mills across Sarawak, absorbing 1.7 million tonnes of CPO, or 55 per cent of the state’s production.
In sourcing CPO to feed its refinery, Wilmar told planters in Sarawak that it will stop buying oil from palms planted in areas of “high carbon stock” and peat swamp after 2015.
This triggered the ire of planters in the state because Wilmar’s pledge prohibits cultivation of oil palm on peat land and confines the opening up of oil palm plantations to only young scrub and cleared/open areas.
Masing likened Wilmar’s unreasonable prohibitions on its palm oil suppliers to economic bullying. “This directive from Wilmar is very disastrous because it could stop the government’s poverty eradication programmes,” he said.
“The state government will not succumb to baseless allegations. I do not agree with the argument that planting oil palms in logged-over areas and peat swamps is bad for the environment,” he said, explaining that good peat soil management is the basis for sustainable food production and a preventive measure against the spread of fire.
“We need to differentiate between managed and unmanaged peat,” he said. He explained that land compaction and establishment of a trench system was a pre-requisite to any oil palm development in Sarawak’s peatland. A lot of effort goes into ensuring water levels in the maze of trenches is at 50cm to 75cm from the surface. This is achieved through a series of stops, weirs and water gates.
“Oil palm planters in Sarawak follow a set of proven, good agricultural practices that balances the needs of people, planet and profits,” he said.
Meanwhile, in an interesting Valentine’s Day twist, Masing noted Wilmar’s “unloving stance” towards its suppliers in Sarawak seemed to have made a U-turn and concede to logic.
In its February 14 letter to Sarawak Land Development Ministry, Wilmar chairman and chief executive officer Kuok Khoon Hong assured that Wilmar’s policy would not affect CPO purchases from oil palm planters which had previously developed large tracts of peat land.
Last Friday, the third month palm oil futures on Bursa Malaysia Derivative closed at RM2,796 per tonne. Planters welcome the prospects of higher exports, having braved through dismal pricings of between RM2,200 and RM2,500 in the first 10 months of 2013.
He reiterated that Sarawak is steadfast in its commitment to raise the income and living standard of rural folks through oil palm development.
“Sarawak’s oil palm expansion programme will go ahead as planned. The rise in palm oil prices will help generate extra capital for smallholders to expand their oil palm plantings,” he told Business Times in a telephone interview from Kuching yesterday.
Malaysian Palm Oil Board’s data showed that Sarawak produced 3.1 million tonnes of crude palm oil (CPO) last year. “This year, with more trees maturing, we hope to achieve between five and 10 per cent output growth to 3.3 million tonnes,” Masing said.
In December 2013, Wilmar International Ltd signed a “No Deforestation, No Peat, No Exploitation” pledge in its palm oil trade with consumer goods giant Unilever Plc.
Wilmar’s refinery in Bintulu is the main buyer from 41 palm oil mills across Sarawak, absorbing 1.7 million tonnes of CPO, or 55 per cent of the state’s production.
In sourcing CPO to feed its refinery, Wilmar told planters in Sarawak that it will stop buying oil from palms planted in areas of “high carbon stock” and peat swamp after 2015.
This triggered the ire of planters in the state because Wilmar’s pledge prohibits cultivation of oil palm on peat land and confines the opening up of oil palm plantations to only young scrub and cleared/open areas.
Masing likened Wilmar’s unreasonable prohibitions on its palm oil suppliers to economic bullying. “This directive from Wilmar is very disastrous because it could stop the government’s poverty eradication programmes,” he said.
“The state government will not succumb to baseless allegations. I do not agree with the argument that planting oil palms in logged-over areas and peat swamps is bad for the environment,” he said, explaining that good peat soil management is the basis for sustainable food production and a preventive measure against the spread of fire.
“We need to differentiate between managed and unmanaged peat,” he said. He explained that land compaction and establishment of a trench system was a pre-requisite to any oil palm development in Sarawak’s peatland. A lot of effort goes into ensuring water levels in the maze of trenches is at 50cm to 75cm from the surface. This is achieved through a series of stops, weirs and water gates.
“Oil palm planters in Sarawak follow a set of proven, good agricultural practices that balances the needs of people, planet and profits,” he said.
Meanwhile, in an interesting Valentine’s Day twist, Masing noted Wilmar’s “unloving stance” towards its suppliers in Sarawak seemed to have made a U-turn and concede to logic.
In its February 14 letter to Sarawak Land Development Ministry, Wilmar chairman and chief executive officer Kuok Khoon Hong assured that Wilmar’s policy would not affect CPO purchases from oil palm planters which had previously developed large tracts of peat land.
MH370 ... please come back
Meanwhile, flights departing and arriving at Kuala Lumpur International Airport had begun to resume normalcy ... with passengers and cabin crew paying more attention to keeping regular contact with their friends and families.
This is one of the most frequently shared photo on Facebook accounts that had triggered millions of "likes" - a drawing of a plane with multi-coloured hands reaching up with the caption, "Please come back".
We must never lose hope in finding these 239 people.
KUALA LUMPUR: MALAYSIA
Airlines' integrity should not be prejudiced by the disappearance of
the MH370 flight as it has a good safety record. "This is a rare
incident," said International Air Transport Association (IATA)
director-general and chief executive officer Tony Tyler.
In
a media conference call from Geneva, Switzerland, yesterday, he
recalled that the last fatal incident concerning Malaysia Airlines was
20 years ago and it involved a small aircraft, a Fokker 50.
Six
days ago, Malaysia Airlines' MH370 flight from Kuala Lumpur to Beijing
went missing. The Boeing 777 had 239 people on board when it vanished
off radar screens early Saturday morning, triggering a massive
international search effort. Todate, dozens of ships and aircraft from
12 countries continue to scour surrounding seas off Malaysia for the
ill-fated aircraft.
Tyler
was responding to queries whether the MH370 flight disappearance is
causing loss of consumer confidence in Malaysia Airlines and triggering
fear of flying among travellers all over the world.
He reiterated that aviation is a safe industry.
"Last
year, around 3.1 billion people travelled by air. This year we expect
traffic to surpass 3.3 billion passengers. That is nine million people a
day with over 6,000 people per minute boarding an aircraft. The global
fleet travels some 70,000km each minute," he said.
"We
are able to achieve this through teamwork that includes airlines,
regulators, air navigation service providers, airports, caterers, ground
handlers and aircraft, engine and systems manufacturers," he said.
"As
an industry, we make safety our top priority and work together to
achieve it. But on very rare occasions tragedy strikes. And each time it
does, it re-dedicates the whole industry to continue to improve," he
added.
"We
are saddened by this event, and our thoughts and prayers are with the
family members and friends of all those involved," said Tyler.
"Like
everyone, we hope that the aircraft will be located so that those with
friends and loved ones on board MH370 flight can move beyond the current
uncertainty. It will also allow us to transit from the current
speculation into a full-scale investigation. The goal is to find out
what happened and make sure that it does not happen again," he said.
"I
should make clear IATA's role in this. We are not an investigator or
regulator. And we are not a speculator. As the industry association, our
role is to provide useful background and context where necessary.
"More
importantly, once the authorities have determined the cause of this
apparent tragedy, we will work with our members and other stakeholders
to apply any lessons learned so as to help ensure that whatever may have
happened to MH370 is not repeated," he added.
On
the global outlook, Tyler said the airline industry is set to deliver a
second year of improved profits. This is despite a slight downward
revision to its industry outlook for 2014 of US$18.7 billion (RM61.7
billion) from the previous forecast of US$19.7 billion.
This
revision is prompted by higher oil prices in the last three months
which are now expected to average US$108 per barrel. This is US$3.50 per
barrel more than previous projections. The US$3 billion added cost on
the industry's fuel bill is expected to be largely offset by stronger
demand, especially for cargo, which is being supported by a
strengthening global economy.
Overall industry revenues are expected to rise to US$745 billion, which is US$2 billion more than previously projected.
Plantation stocks rally as palm oil futures hit RM2,901
Heavyweight plantation counters like Sime Darby Bhd, IOI Corp Bhd, Felda Global Ventures Holdings Bhd, Kuala Lumpur Kepong Bhd (KLK) and Genting Plantations Bhd have started to climb and experienced profit-taking dips.
When contacted by Business Times, Maybank Investment Bank Bhd analyst Ong Chee Ting reiterated his view that crude palm oil (CPO) prices will remain relatively resilient due to biological tree stress and as the industry enters into seasonally lower production months from February to April.
Latest numbers from the Malaysian Palm Oil Board showed slowing production amid stable palm oil exports. Yesterday, the industry regulator said palm oil inventory fell to the lowest level since July 2013 amid low production season.
As at end-February 2014, the palm oil inventory settled at 1.66 million tonnes, much lower than market expectations of 1.8 million tonnes.
"We reckon that palm oil prices will stay relatively high at RM2,800 to RM2,900 per tonne over the next two months as the stockpile is tight," Ong said. "Nonetheless, it is possible for palm oil prices to breach RM3,000 per tonne in the near term if the present weather condition does not improve over the next three weeks," he added.
JF Apex Research, in its research note, said it is concerned that the prolonged dry spell in Malaysia could hurt CPO production in the mid-term. It maintained an "overweight" call on the plantation sector and its favourite counters include Genting Plantations, IJM Plantations Bhd and KLK.
Separately, RHB Investment Bank, in its notes to investors, noted the bullish tone of last week's Palm and Lauric Oils Conference & Exhibition: Price Outlook 2014 is further fuelling the current CPO price rally.
Most of speakers at the conference believed that there is still upside potential for palm oil prices, with projections of RM3,000 per tonne by mid-2014. Should El Nino occur, this may drive prices beyond RM3,000 per tonne.
RHB Investment Bank feel that prices are expected to average at around RM2,700 per tonne this year. "We maintain our 'overweight' stance on the sector. We are still at the early stage of a bull market as valuations are still inexpensive. Funds have only just started to flow into the palm oil sector," it said, adding that its top picks include IOI Corp and Jaya Tiasa Holdings Bhd.
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