Nextgreen partners IOI Corp for RM600m paper pulp project, expects RM300m revenue by 2026

KUALA LUMPUR, April 8, 2024 -- Nextgreen Global Bhd on Monday signed a shareholders' agreement with IOI Corp Bhd to develop a paper pulp plant in Pahang which may contribute over RM300 million in revenue by 2026.

From left: Nextgreen IOI Pulp Sdn Bhd director Lim Kah Yee, Nextgreen Global Bhd MD Datuk Lim Thiam Huat, IOI Group MD Datuk Lee Yeow Chor and Nextgreen IOI Pulp director Amir Mohd Hafiz Amir Khalid. (File pic by IOI Corporation).

Nextgreen Global Bhd MD Datuk Lim Thiam Huat said the company has secured a buyer, Japan-based paper pulp trader Marubeni Corp, for its first 100,000 tonnes to be produced by the joint venture when the plant starts production in 2026. (Photos: The Edge Malaysia)

IOI Corp Bhd MD Datuk Lee Yeow Chor: We have long regarded the utilisation of palm-based biomass for value-added applications as an important activity within the circular economy. (Photos: The Edge Malaysia)

The RM600 million paper pulp production facility will be developed and operated by a new joint venture company to be incorporated following the shareholders' agreement. Nextgreen will hold a 55% stake in the joint venture Nextgreen IOI Pulp Sdn Bhd, and IOI Corp will hold the remaining 45%.

The plant will have an initial annual capacity of 100,000 tonnes of chemical bleached pulp made from oil palm empty fruit bunches (EFB). The EFB, which will be supplied by IOI Corp, is a byproduct waste from oil palm industries that is typically unutilised.

The venture will transform the agricultural waste into green and sustainable products such as wood-free paper, tissue paper, packaging paper and pulp-moulded packaging.

Nextgreen managing director Datuk Lim Thiam Huat said the company has secured a buyer, Japan-based paper pulp trader Marubeni Corp, for its first 100,000 tonnes to be produced by the joint venture when the plant starts production in 2026.

"We have actually gotten the letter of intent from Marubeni for the paper pulp offtaker,” he said at a press conference following the signing ceremony. “But at the same time, this will not limit us from going further to [engage with] customers from China as well.”

The plant will be constructed within Nextgreen's 410-acre Green Technology Park in Pekan centred on paper and pulp. In addition, projects in the park also include fertiliser, animal feed, research and education, as well as renewable energy, according to its website.

So far, only 43 acres of the industrial park have been taken up, but once completed, the entire industrial park is targeted to produce about 400,000 tonnes of paper pulp each year among other projects.

Venture a part of IOI Corp's net zero emissions target

For IOI Corp, the venture with Nextgreen, along with its palm wood venture using oil palm trunks, will help the company achieve its net zero emissions target, said MD Datuk Lee Yeow Chor.

"We have long regarded the utilisation of palm-based biomass for value-added applications as an important activity within the circular economy," he said. "This is a good partnership, and we think that this is a very scalable kind of venture with the first plant in Pahang."

There could be more similar factories that could be set up in East Malaysia, either in Sabah or Sarawak, Lim added.

For the financial year ended Dec 31, 2023 (FY2023), Nextgreen's net profit fell 29% to RM9.65 million from RM13.61 million in the previous year, despite revenue almost doubling to RM63.73 million from RM32.93 million.

Besides the absence of certain non-operating income, Nextgreen attributed the lower net profit to lower gross profit margin from its construction contracts and reduction in revenue attributed to the printing and publishing segment due to the lower customer orders.

In FY2023, the manufacturing segment contributed the most revenue to the group at 51.4% of total revenue, followed by property and construction at 43% and printing and publishing at 5.6%.

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