Mitsui Takes Stake in Oleochemicals


Japans Mitsui & Co. Ltd. will invest U.S. $44 million in Malaysian-owned oleochemical manufacturer Taiko Palm-Oleo (Zhangjiagang) Co. Ltd., located in Jiangsu Province, China.

The 20-80 partnership between Mitsui and TPOs parent company, Kuala Lumpur Kepong Berhad, will be Tokyo-headquartered Mitsuis first joint venture with a company based in China.

KLKs financial backer, KLK Premier Capital Ltd., previously held 100 percent of the shares of TPO.The deal is expected to close within the first quarter of 2015.

Oleochemicals, manufactured from palm oil and other plant and animal oils, are used as feedstocks for biolubricants, among other applications such as soaps, detergents and biofuels. Established in 2004, TPO produces oleochemicals likefatty acids and glycerin, used in the manufacture of lubricants.

According to Mitsuis press release, The world market for oleochemicals is currently worth around 7 trillion (U.S. $58.8 billion) and is expected to grow by over 4 percent annually- over 7 percent for China. However, KLKs interim financial report for the year ended Sept. 30, 2014 admitted that the oleochemical division incurred a loss of 13.4 million ringgits (U.S. $3.8 million), caused by the sharp decline in oil prices in the current quarter, which had pressured margins and stocks write-down.

KLK forecasted in its report that it expects reasonable profits from its oleochemical division in the current financial year.

When it completes its expansion project, which is currently in progress, TPO will improve the cost efficiency of its production operations and target further enhancement of its competitive advantage by introducing new high-added-value derivative products, Mitsui said.

Mitsui and KLK have jointly operated an oleochemical manufacturing and supply business in Malaysia since 1991. This project will not only further strengthen the partnership between the two companies, but will also improve their access to expanding markets. In addition, Mitsui and KLK will be able to broaden their business base through expansion of their oleochemical derivatives business, Mitsui continued.

KLK, publically listed in Malaysia, said in a recent statement that Mitsui will help promote sales of TPOs products to Japanese companies operating in China. Mitsui will also contribute chemical manufacturing technology used in Japan and other markets.

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