Agriculture firm FGV Holdings Berhad (FGV) and China Machinery Engineering Corporation (CMEC) have reportedly signed a memorandum of understanding (MoU), for exploring the viability of forming a joint venture aimed at building paper pulp production facilities. Apparently, the companies will also explore the potential commercialization and distribution of the paper pulp business to global markets.

Sources familiar with the matter inform that CMEC has collaborated with research institutes in Guangxi and Hangzhou. The company wants to utilize technology for converting empty fruit bunches (EFB) into paper pulp for commercializing it. For the uninitiated, after fruits have been removed for oil pressing, EFB is what remains of the fresh fruit bunches.

Azhar Abdul Hamid, interim group president and Chief Executive Officer of FGV, was quoted saying that the initiative is aligned with the company’s strategy of focusing on downstream activities. The company produces about 3.47mn tonnes of EFB from its 68 mills all over Malaysia every year.

Hamid mentioned that this green project is in line with the company’s waste-to-wealth initiative, to ensure the operations are more sustainable. FGV hopes to explore the opportunity of integrating operations of its existing mills with the engineering expertise of CMEC. The company also plans on establishing paper pulp production facilities with 50,000 tonnes per annum capacity, initially.

FGV could further leverage the domestic knowledge and extensive engineering of CMEC on the pulp market of China. Public awareness on using green and sustainable products like paper pulp is growing every year and this business has great potential for FGV to explore while leveraging huge raw material source for competitive advantage, Hamid further added.

According to records, China imported 23.72 million tonnes of paper pulp in 2017, exhibiting a growth of 73.4 percent between 2009 and 2017. FGV is expecting to capitalize on the demand of paper pulp from China, since the price of paper pulp is US$900 per tonne.