Oleon’s Klang operations establishes global network of export markets
PORTKLANG: Usingitsoperations in Klang, Oleon Sdn Bhd, whose parent company is based near Gent, Belgium, has over the years built a network of major export markets around the world.
Indeed, Malaysia has become an important fulcrum in the company’s global expansion.
Oleon is Europe’s largest oleochemical producer that converts vegetable oils into fatty acids and then into esters which are used in cosmetics, homecare and food additives including detergents, lubricants, hydraulic oils, solvents, coatings and paints.
“We have built up an international network ... our Klang operations are well established. Some 40 per cent of our exports are destined for Europe, 30 per cent to the United States and the remaining 30 per cent to Asia.
“But, some 80 per cent of our total production in the region is in Malaysia. A mere one or two per cent of our production here is consumed in Malaysia. Our products - ingredients - are lubricants used in personal care and food products,” explained James De Caluwe, the managing director of Oleon Sdn Bhd, in a recent interview with Bernama.
The group started to produce biodiesel in the 1980s from rapeseed. Although rapeseed oil may be suitable for some applications, it is not suitable for all purposes.
De Caluwe explained how the company selected Malaysia as a site for setting up its operations.
“We decided to use palm-oil and came to Malaysia. But, we had also considered Indonesia and Singapore.
“Indonesia has a fragmented industry location. Singapore, on the other hand, does not have a palm industry, though it has good logistics.
“We looked at Malaysia and had to decide between Johor and Selangor. Selangor was attractive for us because of logistics and also as source of palm oil,” he said.
With an increasing “green consciousness”, whereby environmental protection plays a crucial role in production and consumption of a product, Oleon makes a conscientious effort towards protecting the environment.
“We emphasise the ‘ green character’ of our products. We hope that China will become a ‘green advocate’.
“We do not use palm oil directly but use the palm kernel oil which is split into glycerine and fatty acids.
“We use fatty acid which is extracted in Malaysia from palm kernel, coconut and palm- oil kernel,” the Oleon managing director said.
The company’s annual production capacity is around 40,000 tonnes (liquid form) at one factory while a second factory produces 15,000 tonnes (powder form). The total combined capacity was about 55,000 tonnes for the two plants.
Taking stock of 2016, De Caluwe described it as a “difficult year” because of the fierce competition and falling oil prices.
“Consumption has dropped ... consumers have become price conscious in the world and may not necessarily buy ‘green products’. Consumers are prepared to pay a small premium but not much,” he said.
He spoke of the wide usage of palm-oil production and noted that it helped lift people out of poverty.
“Oil chemical production is capital intensive. Growth is possible in the derivatives segment and depends largely on overseas demand.
“The sentiment on growth in this segment is mixed. We also communicate our views on issues of interest to our business to the Malaysian government through the European Chamber of Commerce, the Malaysian Investment Development Authority, the KLInvest, etc.
“Our current difficulty is associated in making purchases of our needs in Malaysian Ringgit because of potential currency volatility. This has also affected the petroleum industry. This requirement may have implications on business ...” he said.
De Caluwe also discussed trends that affected consumer behaviour.
Based on information on market trends and research, he predicted that consumers would show a greater propensity towards ready made food leading to greater consumption. — Bernama