Friday, June 20, 2008

CP Units to Expand Bioplastic Business

source: http://www.bangkokpost.com/200608_Business/20Jun2008_biz36.php

The Charoen Pokphand (CP) Group is studying the possibility of jointly investing almost two billion baht with its US partner Nature Works to upgrade its bioplastics business in Thailand. Chaipong Chainapakorn, senior vice-president of CPPC Public Co, said the joint venture would produce a minimum 24,000 tonnes annually of polylactic acid (PLA), now purely imported for domestic use.

CPPC, the petrochemical arm of the CP Group, currently buys PLA polymers from Nature Works and Metabolix, also from the US, to serve its packaging business that includes petroleum-based and bioplastic production.

Nature Works, the world's top PLA supplier, would provide technology to produce corn-based PLA while CP has expertise in farm crops that would be used as raw materials.

''CP has competitive advantages in farm crops to develop this project given our long-time experience in agriculture business,'' said Mr Chaipong.

The strategy followed the move by a Japanese company to invest in PLA production in Vietnam by using cassava as the raw material. Production is scheduled to start by the end of this year.

''We think that the project has potential because the world is going to use more and more bioplastic than petroleum-based plastics due to declining petroleum reserves and the environmental benefits,'' Mr Chaipong said.

Citing figures from European Bioplastics, an industry association, Mr Chaipong said the global market for bioplastics had expanded by 30% yearly over the past five years and was forecast to reach one million tonnes in 2010.

On supply side, world production of bioplastics is only 500,000 tonnes, or just 0.25% of the 200 million tonnes plastics produced annually.

However, the bioplastics business in Thailand has yet to expand significantly due to high cost of production. As well, there are no regulations compelling consumers to use more environmentally friendly products.

Packaging made of bioplastic is priced 1.5 to two times higher than conventional products, Mr Chaipong said.

He said the government should offer incentives for manufacturers to produce green packaging, for example by waiving the current 5% import tax on PLA compounds. As well, environment-related taxes should be considered to encourage demand by consumers, he added.

CPPC aims to devote 5% of its total capacity to bioplastics next year with a volume of 1,000 tonnes annually.

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