FGV aborts deal with US-based firm on biodegradable plastics
15 June 2016
Felda Global Ventures Holdings Bhd (FGV) has failed to reach an agreement with its partners for its plan to produce biodegradable plastics from palm oil biomass waste in Malaysia.
The plantation giant has terminated its memoranda of understanding (MoU) signed with US-based Newlight Technologies LLC and Innogas Technologies Sdn Bhd.
“FGV and the other parties to the MoU were unable to reach acceptable agreement terms, and thus had taken steps to terminate the same,” FGV said in a filing with Bursa Malaysia.
Last December, FGV announced that its unit – Felda Global Ventures Downstream Sdn Bhd – was teaming up with Newlight Technologies and Innogas Technologies to produce biodegradable plastics from palm oil biomass waste in the country.
The project is aimed at diversifying and further developing the company’s new revenue streams, in line with a core pillar in its five-year transformation strategy of revenue enhancement.
Newlight is a California-based company involved in producing thermoplastic materials made from air and greenhouse gases, while Innogas Technologies is involved in consulting, process plant engineering and technology for chemical and renewable energy.
FGV had said that the parties involved planned for the project to kick off in the second quarter of 2016, with the first plant construction to begin in the fourth quarter of next year, to be completed within 14 months.
FGV expected the project to be expanded to 10 palm oil mills over the next five years.
While the termination of the MoU had been expected, analysts said the impact should not be negative. “To us, the cancellation is no big deal. As such, the termination should not be an issue since it was not factored in,” an analyst said.
Nevertheless, another analyst said if the sustainable project takes off, it would be a boon for the company.
Meanwhile, shares of FGV rose seven sen to RM1.51, its highest since early April, 2016. Year-to-date, it has fallen some 9.94%.
Source : thestar.com.my