New Britain Palm Oil to Develop Processing Plant in Mersey Docklands

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Researched by Industrial Info Resources (Sugar Land, Texas)--New Britain Palm Oil Limited (LSE:NBPO) (NBPOL) (Kimbe, Papua New Guinea) has announced plans to build a palm-oil processing plant on a six-acre site in Bootle in the U.K.'s Mersey docklands. The project is expected to cost around $23 million. The project will initially generate 28 jobs during the first two phases, but this number is expected to increase as operations expand.

The choice of the Liverpool area as the site for the factory was based on the availability of excellent deep-water facilities and an agreement reached with Tate and Lyle plc (OTC:TATYY) (London, England) regarding the use of nearby tanker storage capacity. Palm oil from NBPOL's 46,000-hectare palm tree plantations in Papua New Guinea will be shipped to the Port of Liverpool approximately six to eight times every year in tankers, each of which will contain between 20,000 and 50,000 tons of raw oil.

The global palm oil industry has grown to an annual production total of 45 million tons. NBPOL accounts for 350,000 tons per year of the total production worldwide. However, in terms of plantation area, NBPOL is quite small compared to Singapore's Wilmar International (SIN:F34), which owns 570,000 hectares, or Malaysia's Sime Darby (KUL:SIME) (Kuala Lumpur), which owns 525,000 hectares. Palm oil is used in many commonly available supermarket items such as bread, margarine and cosmetics. Around one in 10 products on supermarket shelves in Britain rely on palm oil as a major ingredient.

Several leading companies such as Tesco plc (OTC:TSCDY) (Cheshunt, England) and J Sainsbury plc (OTC:JSAIY) (London) are planning to shift their products to use sustainable palm oil. NBPOL views this trend as a major opportunity as the company claims to be the first supplier of sustainable and traceable palm oil into the European Union (EU). The EU's target of procuring 10% of all vehicle fuels from biofuels by 2020 has strengthened the demand for palm oil in the production of biodiesel as a viable alternative to fossil diesel. However, palm oil faces competition from other biofuels such as corn-based ethanol, oils derived from sunflower seeds, soybeans and rapeseed, and new technologies such as procuring oil from algae farming.

Indonesia and Malaysia account for more than 80% of the global production of palm oil. The industry provides a basic source of income for an estimated 1.5 million small farmers in Indonesia, while in Malaysia the figure is around 500,000. These smallholdings account for as much as 33% of the output in these two countries.

On the flipside, land clearing for palm plantations has a large impact on endangered species such as orangutans in Borneo and the Sumatran tiger. Additionally, deforestation and the burning of tropical forests to make way for palm plantations result in huge carbon emissions. A recent study claims that each ton of palm oil produced on tropical peatlands in Indonesia will generate anywhere between 15 and 70 tons of carbon dioxide in 25 years.

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