Palm oil price hikes chill Malaysian biodiesel expansion; only 4 of 91 approved plants have opened

October 31, 2007

In Malaysia, the government has approved 91 biodiesel projects to date but only four are in operation. The high price of crude palm oil is cited as the cause for the expected capacity boom that has not materialized.

However, earlier this week HSBC Bank MalaysiaÂ agreed to provide financing for a $59 million Mission Biofuels biodiesel project in Malaysia that will include two plants in Malaysia.

The first biodiesel plant, in Kuantan, Pahang, Malaysia, will produce up to 18 Mgy per year of palm-oil biodiesel which will be exported to Germany under a five-year contract.

Crude palm oil futures reached an all-time record last week when the Bursa Malaysia Derivatives Exchange January contract closed as $829.43 a tonne.