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Korean biomass waste chips deal for Tropik Woods

February 14
09:05 2013

By RACHNA LAL

Tropik Woods Industries Limited’s latest joint venture agreement with a Korean biomass and renewable energy specialist is expected to add a completely new chapter for the company.
Executive chairman, Faiz Khan, has just returned from Korea after successfully sealing an agreement with GIMCO Company Limited to export biomass waste chips.
The project is expected to create around 200 jobs.
Mr Khan confirmed to Sun Business the agreement, signed at the Fiji Embassy in Seoul, Korea, will entail three aspects which GIMCO will do:

1. Set up a wood waste (biomass) processing plant at Wairiki with all biomass being exported initially;
2. Develop biomass gasification in rural areas that will substitute the high cost diesel generators; and,
3. Develop independent power producer (IPP) projects in Fiji using bioenergy.

Export earnings

Mr Khan said the foreign earnings from initial exports of biomass waste will be around US$4 million (FJ$7 million) to US$5 million (FJ$8.8 million) per year.
“Depending on the success of the biomass gasification for rural Fiji and the development of new independent power producers in the near future, the effect on import substitution is likely to be far greater,” he said.
The agreement followed Prime Minister Commodore Voreqe Bainimarama and Mr Khan meeting GIMCO Company Limited’s chairman, Sang Sun Lee.
Commodore Bainimarama has assured Government’s full support for the new joint venture.
Producing biomass waste chips

Mr Khan said biomass waste chip is produced using the by-product of wood chip processing (bark), the left over branches in the forest after harvesting and various other bio waste such as grass, coconut husks etc.
“In Wairiki, we currently do not have any use for our bark from wood chip processing or the wood waste left in the forest after a harvest,” he said.
“The joint venture provides us the opportunity to use this waste. Tropik Woods will sell its biomass waste to the joint venture.
“The joint venture will then process and sell in the open market to the highest bidder with equal profit sharing.”
Mr Khan said depending on the success in Wairiki, they could expand to Viti Levu.

Partnership decision

Mr Khan said: “We have partnered with GIMCO because together with their sister company, Kenertec, they lead biomass and cogeneration (power production using boilers and turbines) technology in Korea.
“They also have successful operations in China, Indonesia and Cambodia.
“At Tropik Woods, we lack the know-how into biomass processing and cogeneration technology. But we have existing infrastructure facilities and the biomass resource.
“GIMCO has the technology but not the resources. So it’s a great match.”

Installing facilities

Mr Lee said everything was ready and they can start to install the facilities in Fiji as soon as possible as they have their own market in Korea.
“Fiji only exports high quality chips and other products are thrown away. That is what we can use; everything else that is thrown away in the forestry and agriculture sectors in Fiji,” Mr Lee said.

Reinventing strategies

Meanwhile, Mr Khan said the Fiji Pine Group of Companies had put a strategy to diversify their product and customer base.
“Traditionally we have had only one or two buyers of our wood chip with 60 to 70 per cent reliance of the company’s business on wood chip,” he said.
“Our previous business model was flawed and unsustainable. With the volatility and downward trend in global wood chip demand, we need to re-invent ourselves.
“Over the last year, we have had a number of business ventures that have diversified our product and customer base.
“The entry into China for wood chip exports and the trial plots for pine resin extraction were the two major ones.
“Our focus this year on re-invigorating our lumber/ply/veneer production lines and our troubled independent power producers in Drasa are others.”

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