BANGKOK, Apr 14, 2020 – (ACN Newswire) – Global Green Chemicals PCL (SET:GGC) Managing Director, Mr. Witoon Suewatanakul discusses the company’s strategy and outlook in The Executive Talk (TET) by ShareInvestor.com.
TET: Please explain GGC’s business model.
GGC’s aspiration is to become a leading Green Chemical Company. Being a listed company on the Stock Exchange of Thailand since 2017, GGC has embarked on investing in our products and capacity. Currently our two main businesses are biofuels and biochemicals which include Methyl Esther (ME), Fatty Alcohols (FA) and Glycerine. These products are commonly used in the automotive industry, personal care, home care, and pharmaceuticals. With our current investment projects, GGC will be expanding into bioplastics which is an exciting industry and we will be able to provide higher value-added products to the global marketplace and ultimately achieve our company’s aspiration.
TET: What is the status and impact of the investment’s projects that GGC?
There are two key projects, the first project is the Refined Glycerine Plant #2, an investment of 363 million baht which is on target to COD by the fourth quarter of 2020. It is an integrated project to enhance the value of by-products from Crude Glycerine from our ME production and allow us to capture the market growth of high-volume industries.
The second project is Nakhonsawan Biocomplex (NBC) Phase1, an investment of 7.5 billion baht which is expected to be completed by the first quarter of 2021. It is a joint venture between GGC and Kaset Thai International Sugar Corporation Plc (KTIS). NBC is an integrated complex to produce biofuels, biochemicals, and bioplastics from sugarcane. We will start Phase1 which consists of 1) crushing mill with a nameplate capacity 2.4 million tonnes per year 2) ethanol plant with a nameplate capacity of 185 million litres per year and 3) biomass power plant to generate electricity and steam with a nameplate capacity 85 MW and 475 tonnes per hour, respectively.
TET: What impact does the government policies have upon the industry in Thailand?
The agricultural sector is a crucial industry for Thailand. An example of how GGC works with the Ministry’s is on the implementation of B10 and B20. We are a biodiesel expert in Thailand and understand the end-use of our products. The Ministry of Agriculture is responsible for the supply side while on the demand side we support the Ministry of Energy the possibilities of the high blending ratio, including the impact and the consequences of using it.
Also, the automotive industry is reluctant to implement the high bio content and we have to cooperate with the Ministry to convince the associations to make adjustments to allow the use of bio-fuels in their engines, further climbing up blending rate close to Indonesia and Malaysia.
Thailand has sufficient raw materials such as cassava, sugar cane and oil palm. The first two are raw materials for ethanol. Brazil today very well adjusts the blending rate as they are at E100 today when sugar prices are low, and when sugar prices increase, they will reduce to E50. This helps balance the demand and supply in their domestic markets. For Thailand we are implementing the same ideas to ensure that agricultural prices can remain relatively stable for the population.
TET: How does GGC manage the volatility of commodity prices?
Commodities are volatile by nature as we cannot control the climate, but we ensure that we are effective with a strong team to manage the costs and revenues efficiently. Also, we employ good technology that provides flexibility of feedstock among Crude Palm Oil (CPO) and other alternatives feedstock.
For Biodiesel the pricing mechanism in Thailand is that the government has laid the foundation that it is a cost plus, and import of external feedstock is not allowed, so we only use the domestic feedstock. Our supply chain management minimise the risk exposure to ensure that the company has a certain margin as we do not want to speculate on the pricing.
Now the CPO price in Thailand is regulated and not 100% correlated to the global prices because of the Government’s regulation. And, Thailand’s CPO price is higher than the global price. This is the hurdle for biodiesel export as feedstock is the major cost of production.
For our second business, Fatty Alcohols, we refer global price, demand and supply, and our performance is based upon our technologies and efficiencies to produce high value-added products.
TET: What differentiates GGC from its peers?
Our technology and focus on operational excellence differentiate us from our peers. As GGC is part of the PTT Global Chemical Plc group, there is a strong focus on operational excellence, this is an important criteria for us and is demonstrated in our operational safety and reliability. With the ME plant #2 expansion and the Biocomplex, we are employing the latest technology resulting in having additional high value-added products and expanding into a new industry.
TET: What do you think investors may misunderstand about your business?
Investors understand our existing business quite well as the current businesses are stable and I believe that they are more interested in our future projects especially the bioplastics. The new technology will not only drive our growth but help the domestic economy as Thailand expands from being a pure agriculturally based economy to combined agricultural knowledge with modern technology.
This will help the farmers and uplift the industries in Thailand with research and development of technologies. This will lead to smart farming in the future. Currently the farming season can be volatile, and the Government’s aim is for Thailand to become the bio-hub of ASEAN by 2027 and GGC is one of the key participants in this goal.
TET: What are the biggest challenges facing your business and industry?
During different periods there are different challenges that appear for the business and industry. In the past there were issues with the demand and supply of CPO, and this was then mitigated when the government changed the mandate from B7 to B10 which reduced the excess supply of CPO and solved a major issue for the country.
Currently Thailand is implementing the same regulations as Malaysia and Indonesia, both countries have faced critical problems as they export tremendous amounts to Europe and Europe has announced that Methyl Esther (ME) from both countries will be totally banned by EU community due to environmental concern by 2030.
CPO from Indonesia and Malaysia represent more than 80% of the world production of crude palm oil. Indonesia and Malaysia produce palm oil approximately 40 and 20 million tonnes per year, respectively, and Thailand only produces 3 million tonnes per year. In January 2020 these two countries changed their blending rates, Indonesia increased from B20 to B30 and Malaysia from B10 to B20. Every country will have to solve their own issues.
For Thailand the balance between demand and supply is appropriated and the country can ensure that there is a suitable portion of excess supply as inventory for the country usage. However, if the country shifts to B20 too quickly as a mandate, it will create significant problem as demand will exceed supply. Indonesia and Malaysia both are more efficient in their CPO production, with higher yields leading to low costs and a lower selling price than Thailand. Thus, Thailand has to develop farming process and technology to improve CPO yield.
TET: Where do you see GGC in five years from now?
Our aim is to be competitive and promote sustainable growth through bio-related industries. With the investments and initiatives taken today, GGC’s business portfolio will cover biofuels, biochemicals and bioplastics. This support GGC to become globally competitive in five years as a modern leading Green Chemical Business.
About The Executive Q&A Series
The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company and the largest investor relations network in the region. The interview was conducted by Pon Van Compernolle. For more information, email firstname.lastname@example.org. Website: www.ShareInvestorThailand.com
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