A brilliant rebound
Biomass products manufacturer came out of the pit and onto the world stage
AROUND 12 years ago, Datuk Joseph Lim Heng Ee had the biggest setback in his career as an entrepreneur. Due to a lack of trust over how the company’s funds were managed, Lim was forced out from a biomass business he co-founded with two other partners.
“Our first venture into the biomass industry, converting palm oil waste into long dry fibre, was doing well. We exported around 30 container loads every month. All was well until greed took a toll on the partnership,” said Lim of those bitter lessons from his earlier days in business.
Depressed with the treatment he had received, Lim became reclusive and withdrew from the business world. But an advice from his wife prompted him to bounce back with new determination.
Leveraging on his network and experience, he muscled his way back into the business he lost.
He forged a new alliance with his business partner Ngan Teng Ye from Ngan & Ngan Holdings – an investment holdings company with interest in oil palm plantation and mills – and together, they formed Global Green Synergy (GGS) in 2008. The company took up an investment of RM3mil.
Ngan is the eldest son of the late oil palm plantation tycoon Tan Sri Ngan Ching Wen.
Initially, GGS only traded biomass products. But it soon expanded and took to processing and producing its own products.
As GGS’ managing director, Lim has become a well-known figure in the green business scene, having built up his reputation as a pioneering biomass company which focuses on turning palm waste into revenue-generating bio-products.
The company mainly converts palm oil waste (biomass) into palm fibre, palm pellet and other palm-related products. It also makes the machines that produce these products.
Meanwhile, Ngan & Ngan Holdings provides a steady supply of raw materials for GGS’ biomass business, says Lim.
GGS exports up to 100 containers of dry fibre per month.
Around 99% of GGS’ products are exported to China.
North Asia, particularly Hong Kong and China, is also a market where Lim has established strong network and partnerships that play a key role in the company’s growth story.
Lim is an admirer of the creativity and dynamism of small but vibrant economies such as Hong Kong.
With his established contacts in these markets, Lim managed to ride on the growing appetite for environmental technology ventures in the largest Asian economy. One example is its partnership with China’s Elion Resources Group which secured the RMB1bil project to green the Kubuqi Desert in Inner Mongolia. GGS also tied-up with Chinalight (Guangzhou) Import & Export Corp in 2013 to supply biomass pellets.
Back in 2013, the company also set up a joint venture with the Malaysia Palm Oil Board to produce palm bio-briquette that can be used as biofuel.
Now the company prides itself as the first in the country to manufacture bio-charcoal, through a carbonisation technology it invented. Having built a track record in the biomass business, GGS was chosen to partner Japan’s Sumitomo Corp and Nippon Steel Engineering in the production of biofuel products in Perak.
Eyeing lucrative biomass products
Lim’s exposure to the business world started young. He had joined his father’s plastic factory after graduating from Chung Hwa Chinese Independent High School in Kuala Lumpur. That seemed a likely path for him to continue on.
However, a visit to a palm oil mill changed his outlook and career path.
Upon seeing the massive environmental devastation brought about by indiscriminate dumping of palm waste, the young Lim was determined to enter the green business.
Lim never quite forgot his purpose for being in the industry.
In GGS, he looked into the development of many new technologies to help the global palm oil processing industry reduce CO2 emissions and create renewable energy from its waste.
The company has carried out numerous research efforts to come up with suitable solutions. Over the last 10 year, the company has invested around RM20mil to research
and develop new product lines.
But Lim has set his sight on the ultimate prize when it comes to biomass business. There are plans to diversify into higher value downstream products by turning fresh fruit bunch waste into paper pulps.
There are not many companies that have been successful on this front, mainly due to the lack of technology or scale.
But given the sheer size of the market and growing demand for sustainably sourced papers, Lim sees this as one of the most lucrative biomass products.
“We have invested extensively in R&D, with a six person research team dedicated to complete all the necessary research and technologies to make this product. The business feasibility study is the last step, and it will be completed before the end of this year,” says Lim.
Renewable energy
With the successes that it has achieved, GGS has now caught the attention of major corporations and investors. But the partners are not interested to sell any portion of their stakes.
Rather, they are thinking of listing the company in one or two years’ time after registering a solid track record in profitability. GGS only became profitable in 2012.
However, GGS has received approaches from investors interested to invest in its biomass renewable energy (RE) projects, the company’s latest foray in the biomass industry. Lim welcomes any queries from interested parties for this segment.
He notes that most investors prefer to have a majority control in projects such as these, but there is a restriction under Malaysia’s regulation which requires local players to hold at least 51% stake in the company to qualify for the feed-in-tariff (FiT) system.
The FiT system obliges Distribution Licensees to buy electricity produced by Feedin Approval Holders from renewable resources. Distribution Licensees will also pay for renewable energy supplied to the electricity grid for a specific duration.
According to the Sustainable Energy Development Authority (SEDA), by guaranteeing access to the grid and setting a favourable price per unit of renewable energy, the FiT mechanism would ensure that renewable energy becomes a viable and sound long-term investment.
GGS has obtained four licences for biomass-to-energy and biogas-to-energy projects, with total production capacity of up to 12MW. The first one, with capacity for three MegaWatt is expected to come onstream by the end of this year.
It has signed a 16-year power purchase agreement with SEDA.
Lim says the company’s revenue for 2018 is expected to reach RM35mil, while next year’s revenue is projected to surge to RM50mil with additional contribution coming in from the RE division.
Finding the right formula to be profitable in the biomass and eco-friendly business is never easy, as most of the technologies are at the early stage of adoption, making costs uncompetitive. Additionally, the market size is relatively small.
Lim, however, believe the company is beginning to get traction in an industry that is widely viewed as the business of the future and he hopes to inspire others to adopt green practices in their businesses too.