2 GREEN CHEMICAL Mar. / 2014 Tel 03-6382-6580

INTERNATIONAL CONFERENCE? /

2nd ICIS Asian Oleochemicals Conference was

opened in New Year 2014(１)

2nd ICIS Asian Oleochemicals Conference was opened in Park Royal Hotel in Kuala Lumpur, Malaysia

between Wednsday 15th January and Thursday 16th January 2014. This issue is a first highlight of this

conference.

Day 1 Day 1 Day 1 Day 1 9:10 Chairperson’s opening address9:10 Chairperson’s opening address9:10 Chairperson’s opening address9:10 Chairperson’s opening address by by by by

Norman Ellard, Managing Director Asia, IP Norman Ellard, Managing Director Asia, IP Norman Ellard, Managing Director Asia, IP Norman Ellard, Managing Director Asia, IP

SPECIALTIES ASIASPECIALTIES ASIASPECIALTIES ASIASPECIALTIES ASIA

Norm Ellard was born in London UK and

emigrated to Canada in 1965. Norm attended the

University of Toronto for Math and Physics. He

joined P&G Canada in 1973, and after that joined

the Chemicals Division in 1977. He moved to

Cincinnati, OH USA in 1990 to assume the role of

International Sales Manager where he was

responsible for Asia, Latin America and Canada. He

was responsible for the start-up of P&G Chemicals

Asia business (oleochemicals) and the FPG Joint

Venture started in 1993. In 1996, Norm became

Global Sales Director for P&G Chemicals. Besides

responsibility for over $1 billion sales, he also had

various responsibilities over this period for all

advertising and external relations for P&G

Chemicals. Ultimately he also assumed

responsibility for New Business Development

including Food Ingredients, various bio ventures

and bioplastics. He relocated to Singapore in 2005

and became responsible for all the P&G Chemicals

Asia business and MD of FPG., while also

continuing as Global Sales Director. He is

3 GREEN CHEMICAL Mar. / 2014 Tel 03-6382-6580

responsible for multimillion dollar projects in this

arena. After more than 34 years with P&G and over

30 years in the oleochemicals industry he retired

from P&G October 2008 to pursue other interests

and become Director of Rohen Pte. Ltd in Singapore,

a company engaged in consulting and trading. Most

recently he joined IP Specialties, a global trading

company specializing in oleochemicals. He might be

a best chairman of this conference.

●Alternative feedstocks: what else is challenging Alternative feedstocks: what else is challenging Alternative feedstocks: what else is challenging Alternative feedstocks: what else is challenging

the palm oil market?the palm oil market?the palm oil market?the palm oil market?

Meezy Park, Meezy Park, Meezy Park, Meezy Park, Research EconomistResearch EconomistResearch EconomistResearch Economist, LMC , LMC , LMC , LMC

INTERNATIONALINTERNATIONALINTERNATIONALINTERNATIONAL

Outline ofOutline ofOutline ofOutline of herherherher presentation presentation presentation presentation

• Overview of the vegetable oil market for the past

Decade

• Outlook for the feedstocks

• Impact of Indonesian export tax on oleochemical

products

• EU biodiesel policy and the influences on the

oleochemical feedstocks

Conclusion: Conclusion: Conclusion: Conclusion: If enthusiasm for biodiesel continues

to wane, extra production will have to price itself

into the fuel markets. While palm oil has emerged

as a competitive fuel in South East Asia, other oils

have relied on local biofuel mandates to lift their

prices. However, support for biofuels is slipping in

the EU (and US). As a result, other oils may

increasingly find that they will have to buy their

way into more price-sensitive fuel markets, thus

following the path taken by palm oil. Rather than

reversing the price band, the easing back of biofuels

policy will strengthen the importance of the crude

oil markets in determining the price of oleochemical

feedstocks.

● SuperSuperSuperSuper----high oleic safflower oil: a potential high oleic safflower oil: a potential high oleic safflower oil: a potential high oleic safflower oil: a potential

gamegamegamegame----changer for the Asian oleochemicalschanger for the Asian oleochemicalschanger for the Asian oleochemicalschanger for the Asian oleochemicals industry?industry?industry?industry?

Ross Fellowes, Ross Fellowes, Ross Fellowes, Ross Fellowes, Business ManagerBusiness ManagerBusiness ManagerBusiness Manager, CSIRO, CSIRO, CSIRO, CSIRO

4 GREEN CHEMICAL Mar. / 2014 Tel 03-6382-6580

He explained new technology to cultivate Super

high oleic safflower oil(SHO).

A paradigm change in raw-material feedstock is

happened. SHO is ~95% oleic acid in a large-scale

commodity crop oil, and More products in the

pipeline. Oleic applications are wide, and dozens

of derivativesare exist. Multiple applications are as

under:

• Cooking oil; margarine

• Food additives

• Soaps, shampoos, surfactants

• Lubricants

• Pharmaceutical formulations

• Cosmeceutical formulations

• Polymers

• Biofuels

Why safflower? CSIRO think its not a major traded

food crop, not related to other crops – does not

out-cross, technically amenable to genetic

engineering, hardy, widely adapted, easy to grow

with conventional technology, processing uses

conventional facilities. So they regard safflower is

very suitable as a low cost industrial oil crop.

◎◎◎◎EPA's latest Renewable Fuel Standard proposal: EPA's latest Renewable Fuel Standard proposal: EPA's latest Renewable Fuel Standard proposal: EPA's latest Renewable Fuel Standard proposal:

impact on biofuels and oleochemicalsimpact on biofuels and oleochemicalsimpact on biofuels and oleochemicalsimpact on biofuels and oleochemicals markemarkemarkemarke

（（（（ Dennis Griesing, Principal, DCG PUBLIC Dennis Griesing, Principal, DCG PUBLIC Dennis Griesing, Principal, DCG PUBLIC Dennis Griesing, Principal, DCG PUBLIC

AFFAIRS LLCAFFAIRS LLCAFFAIRS LLCAFFAIRS LLC））））

He explained change or amend of American rule for

Revised Renewable Fuel Standard (RFS2).,

EPA’s 2014 Proposal

On November 15, 2013, the US EPA published a

Notice of Proposed Rule Making (NPRM) that

proposes to lower the mandated levels of biofuels to

be blended into the gasoline and diesel

transportation fuel pools. This is a significant

change in regulatory direction to which the biofuels

industry has reacted strongly. Comments are due by

January 28, 2014.

How can we creates a mandatory market for

biofuels.

– “Blenders,” i.e., refiners, blenders and importers,

must incorporate minimum levels of biofuels in

annual transportation fuel sales

• Note: Non-transport fuels: heating oil, jet and

ship fuels count towards the mandates but are not

part of transportation fuels calculation

– Creates four separate but “nested” categories of

biofuels

5 GREEN CHEMICAL Mar. / 2014 Tel 03-6382-6580

– Establishes minimum GHG standards

– Establishes feedstock standards, i.e., “renewable

biomass”

– Creates an expanded Renewable Identification

Number (RIN) program

– Amends the earlier “Equivalence Value” of

biomass-based diesel(BBD)

2014: What Happened? American Petroleum

Institute (API) went to Court!

– API challenged EPA’s 2012 cellulosic biofuel

projections and refusal to reduce the applicable

2012 advanced biofuel volumes accordingly

– Court found EPA methodology was not neutral,

therefore “an unreasonable exercise” of discretion

• EPA 2011 Cellulosic Volumes was 6.9 million/gals

projected, but reality was effectively “zero” said the

Court

• EPA 2012 Cellulosic Volumes was 8.65

million/gals

• Court found that EPA failed to use DOE data and

its methodology failed the “neutrality test”.

Biofuel producers face privileged status loss because

RFS has historically been “Producer-centric”. 2014

Volume Proposal is More User-centric”.

Marketplace realities are given greater status:

• Ethanol blendwall realities

• Infrastructure & Vehicle Constraints

• Reduced gasoline consumption

• EPA has proposed lower mandated volumes

based on real world conditions – not industry

aspirations

– Previously, for example, EPA allowed BBD to fill

cellulosic void instead of reducing overall advanced

and renewable mandates.

– Advanced Biofuels is now cut by 1.55 b/gals

– Total Renewable is now cut by 2.94 b/gal

• Reduced volumes of Advanced and Total

Renewable Fuels diminish the advantages of

“nesting effect”.

– Overall bucket of fuels is smaller

– Fuel types, e.g., whose production exceed category

mandates would have less place to go in RFS2.

• Greater opportunities for non-food source

materials.

– Food vs. Fuel – RFS2 was intended to promote

2nd generation fuels with non-food sources, e.g.,

switch grass.

– EPA claims its proposal would assist in this.

( Biodiesel Tax Credit)

– $1/gal. ended December 31, 2013 was not

extended

– Has been extended, even retroactively, in the past

– EPA cites credit as uncertain production factor

A green revolution: keeping up witA green revolution: keeping up witA green revolution: keeping up witA green revolution: keeping up with the growing h the growing h the growing h the growing

trend of sustainabilitytrend of sustainabilitytrend of sustainabilitytrend of sustainability The supplier’s perspectiveThe supplier’s perspectiveThe supplier’s perspectiveThe supplier’s perspective

Alexandra Booth, Manager of Sustainability, Alexandra Booth, Manager of Sustainability, Alexandra Booth, Manager of Sustainability, Alexandra Booth, Manager of Sustainability,

OLAM INTERNATIONALOLAM INTERNATIONALOLAM INTERNATIONALOLAM INTERNATIONAL

Olam in Brief

•Olam is a leading global player in agricultural and

food ingredient supply chain- we are in 20 platforms

across 65 countries.

•Our uniquely shaped business portfolio has grown

consistently based on a repeatable and scalable

adjacency formula.

•Growing Responsibly: our aim is to create value on

an ethical, socially responsible and environmentally

sustainable basis.

Olam Palm Plantations

•JV with the Government of Gabon to develop

commercial and smallholder palm oil plantations in

6 GREEN CHEMICAL Mar. / 2014 Tel 03-6382-6580

the Republic of Gabon

•Land availability, good agro-climatic conditions

and political stability in Gabon offer attractive

investment opportunities

• Olam is aligned with the Roundtable on

Sustainable Palm Oil (RSPO) Principles and

Criteria; first plantation likely to be certified in

FY16.

Emerging market demand for palm is growing;

Africa is prime for investment

•Globally the oleochemical market is worth US$ 15

billion- annual growth @ 5%-8%; demand closely

tied to global economic growth

•Consumption is flattening out in the US, Europe-

emerging markets will be the growth drivers

•Demand for palm oil in Africa is estimated to

increase significantly from 4.4 mn MT to about 7.7

mn MT by 2025

•Proportion of people with discretionary income

may increase from 43% in 2010 to 52% in

2020;Consumer spending is anticipated to rise to

~$1 trillion by 2020 making the region an attractive

household & personal care market

•Per capita detergent consumption: India/China

2kg-3kg pa vs USA 10kg pa; African consumption

negligible compared to developed markets but set

for growth

Conclusions: Present & Future of Sustainability in

the Supply Chain

•RSPO will remain a relevant multi-stakeholder,

consensus based organization; However, consensus

results in a slower pace of decision making

• The transition to a physical value chain for

derivatives will largely depend on B2B

partnerships; RSPO has made progress through

establishing guidelines for trading certificates on

GreenPalm in the meantime

• Commitment by supply chain players to

traceability and sustainability is critical-global

MNCs will increasingly demand traceable palm oil

products, even for emerging markets

■■■■ Panel discussionPanel discussionPanel discussionPanel discussion based on questions from based on questions from based on questions from based on questions from

audienceaudienceaudienceaudience : Overcoming challenges in the Asian : Overcoming challenges in the Asian : Overcoming challenges in the Asian : Overcoming challenges in the Asian

oleochemicals industryoleochemicals industryoleochemicals industryoleochemicals industry

Tan Kean Hua, Tan Kean Hua, Tan Kean Hua, Tan Kean Hua, Executive DirectorExecutive DirectorExecutive DirectorExecutive Director, IOI , IOI , IOI , IOI

OLEOCHEMICALSOLEOCHEMICALSOLEOCHEMICALSOLEOCHEMICALS

Chris de Lavigne, Chris de Lavigne, Chris de Lavigne, Chris de Lavigne, Global ViceGlobal ViceGlobal ViceGlobal Vice----President of President of President of President of

Consulting for the Industrial PracticeConsulting for the Industrial PracticeConsulting for the Industrial PracticeConsulting for the Industrial Practice, FROST &, FROST &, FROST &, FROST &

SULLIVANSULLIVANSULLIVANSULLIVAN

Suresh Gunaratnam, Suresh Gunaratnam, Suresh Gunaratnam, Suresh Gunaratnam, Senior Manager Senior Manager Senior Manager Senior Manager ---- Marketing Marketing Marketing Marketing, , , ,

WILMAR TRADINGWILMAR TRADINGWILMAR TRADINGWILMAR TRADING

Tanuj Roy, Tanuj Roy, Tanuj Roy, Tanuj Roy, Managing DirectorManaging DirectorManaging DirectorManaging Director, EVYAP, EVYAP, EVYAP, EVYAP

(To be continued)