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Business

Fuji Oil to build Malaysian palm oil factory with local partner

Venture will target demand for responsibly sourced products

OSAKA -- Japan's Fuji Oil Holdings group is teaming up with a Malaysian company to make palm oil products that comply with international standards in order to allay consumer concerns over environmental and social problems rampant in the industry.

The Fuji Oil group and palm oil producer United Plantations will create a 50-50 joint venture. This venture will build a factory with an annual output of 70,000 tons, one of the world's largest for high-end palm oil that addresses environmental and human rights concerns. Fuji Oil will put up 800 million yen ($7.17 million) while its Singaporean subsidiary invests 4 billion yen to construct the plant.

The factory will be built on United's 18,000-hectare plantation and is scheduled to be operational next June. It will be powered in part by biomass power generation using the residues from oil production. Plans call for the production process to receive certification for meeting international environmental and labor standards.

Fuji Oil is targeting demand in Europe, where consumers are sensitive to environmental and human rights issues. Deforestation and child labor have often been cited as concerns surrounding palm oil production in Southeast Asia. In 2004, the nonprofit Roundtable on Sustainable Palm Oil was created to establish an international certification system to accredit sustainable producers.

Palm oil has a wide range of uses from frying to making sweets. Demand is growing in the U.S. and Europe as a healthier alternative to trans fats. The joint venture is expected to sell palm oil to European food producers looking to go green. In addition, Fuji Oil plans to process the oil into fat for use in chocolate production, for example.

Japan consumes about 500,000 tons of palm oil per year for cooking, and Fuji Oil controls half of the market. The company sees greater demand for sustainable products leading up to and after the Tokyo Olympics in 2020.

(Nikkei)

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