KUALA LUMPUR (April 16): Nextgreen Global Bhd (KL:NGGB), a company which turns oil palm empty fruit bunches (EFB) into paper, plans to set up a joint venture company with Chinese Fortune Global 500 company Xiamen C&D Paper & Pulp Group Co Ltd (Xiamen C&D) to set up a RM900 million paper pulp plant in Pahang.

Xiamen C&D is a professional supply chain operation provider of forestry, pulp and paper in China.

In a statement on Wednesday, Nextgreen IOI Pulp Sdn Bhd (NIP) — a 55:45 joint venture between Nextgreen Global and palm oil player IOI Corp Bhd (KL:IOICORP) — announced that it has signed an agreement with Hong Kong Paper Sources Co Ltd, a wholly owned subsidiary of Xiamen C&D, to establish the 3:1 joint venture company (JVco) which will establish the paper pulp plant. It is expected to be set up within 10 business days from Wednesday.

“This joint venture between NIP and Xiamen C&D Paper & Pulp is a powerful testament to the growing synergy between China and Malaysia in building a greener economy together and represents an important initiative for Xiamen C&D Group in the pulp and paper sector," Xiamen C&D general manager Zhang Xiao Hui said during the press conference.

"By integrating NIP’s strength in palm biomass sourcing and processing innovation, together with our robust distribution network, this partnership lays the foundation for a more sustainable pulp and paper supply chain, as well as a more integrated regional economy," he added.

Nextgreen Global will provide the technology and technical expertise for the JV through its patented Preconditioning Refiner Chemical-Recycle Bleached Mechanised Pulp (PRC-RBMP) process, while Xiamen C&D will lead in product off-take and distribution efforts.

"Xiamen C&D is 100% off-taker; that is already in our agreement. Every single tonne produced will be taken by them," said Nextgreen Global managing director Datuk Lim Thiam Huat, noting that Xiamen C&D consumes 16 million metric tonnes (MT) of paper pulp annually.

The first phase will target an annual production capacity of 150,000 metric tonnes (MT) of chemical bleached pulp from EFB, up from the original 100,000 MT target.

The upgrade was made possible by technical input from Xiamen C&D, which consumes 16 million MT of pulp annually. IOI Corporation’s CEO Datuk Lee Yeow Chor noted that the initial 100,000 MT target was too low to meet their partner’s needs.

With the increased capacity, the plant is projected to generate RM450 million in annual revenue from 2027 onwards, exceeding last year’s forecast of RM355 million.

Capital expenditure has been revised to RM900 million, up from RM600 million, due to the expanded production line, said Nextgreen Global managing director Datuk Lim Thiam Huat.

The facility for phase 2 is expected to be completed within 24 months following the completion of phase 1, bringing the total timeline for both phases to less than 48 months, according to Zhang.

Phase 2 will contribute an additional 300,000 MT, bringing the total capacity to 450,000 MT, including phase 1, compared to the 400,000 MT target stated last year.

"Once phase 2 is completed within the next 24 months after phase 1, the annual capacity will increase by an additional 300,000 tonnes," said Zhang.

Lee said once proven successful, there are plans to set up more plants in other regions of Malaysia, with Sabah being a potential location due to its status as a major palm oil-producing state.