South Korea’s CJ CheilJedang Corp and France’s Arkema SA are investing RM2 billion on a bio-tech factory in Malaysia because of the “Petai Belalang” factor, it was revealed.

The Terengganu government has allocated 30,000ha to grow “Petai Belalang” trees so as to produce 10.5 million tonnes of wood chips annually as feedstock for the factory, a government official said.

With the addition of a convenient supply of ammonia from Petronas’ refinery in Kertih and a host of other perks, this has helped to convince the two firms to embark on the fermentation venture.

“It was a case of choosing between Thailand and Malaysia,” the government official noted.

He said profitability of the fermentation business depends on the cost of glucose, which is the main growth medium for the bacteria in the biological process.

“While there isn’t much sugarcane here, there’s access to the government’s platform of long-term imports of raw sugar. Also, there are other factors like a steady supply of feedstock biomass and ammonia gas from Petronas’ Kertih refinery,” he said.

Over the weekend, Prime Minister Datuk Seri Najib Razak officiated at the groundbreaking ceremony for the plant at the Kertih Biopolymer Park, which is poised to be the world’s first bio-methionine and thiochemicals integrated facility.

Also present were Terengganu Menteri Besar Datuk Seri Ahmad Said, Arkema executive vice-president Marc Schuller, East Coast Economic Region Development Council (ECER) chief executive officer Datuk Jebasingam Issace John and Malaysian Biotechnology Corp chief executive officer Datuk Dr Mohd Nazlee Kamal.

The RM2 billion plant is expected to churn out 80,000 tonnes of bio-methionine a year from 2014.

Bio-methionine is mainly used in animal feed to promote growth of poultry and livestock, shorten feeding cycle and increase the quantity of lean meat.

There is every reason for Malaysia to support this initiative, the government official said, as this is the world’s first in producing animal feed additives from biological processes at competitive pricing.

The biotechnology project is expected to generate accumulative gross national income of RM20.4 billion by 2020 and create 2,500 green jobs for Malaysia.

On whether bio-methionine is able to compete favourably with the performance and cost of DL-methionine made from chemical processes, the government official said: “Yes. In fact, the bio-fermentation process used by CJ CheilJedang is also flexible enough to use different biomass feedstocks, such as from woodchips and oil palm empty fruit bunches.”

In an interview with Business Times, CJ CheilJedang president and chief executive officer Kim Chul Ha said the group chose to set up its plant in Terengganu as there is a secure supply of woodchips, the competitive cost of utilities, tax incentives and a good infrastructure set-up.

“There is also respect for private property and intellectual property rights,” he said.

Arkema’s Schuller said: “This joint venture enables Arkema to establish the first thiochemicals industrial facility in Asia. In the near future, we will manufacture other high value added thiochemicals in addition to methyl mercaptan.”