Industry News

Mitsui to Invest USD 44 Mn in KLK’s China-based Oleochemical Business

Published on 2015-01-13. Author : SpecialChem

Mitsui & Co., Ltd. ("Mitsui," Head Office: Tokyo, President & CEO Masami Iijima) and Kuala Lumpur Kepong Berhad ("KLK," Head Office: Ipoh, Malaysia, CEO: Tan Sri Lee Oi Hian), a Malaysian leading company in the palm plantation and oleochemical industries, have reached agreement on Mitsui's participation in the oleochemical business operated by KLK in China. Mitsui plans to invest a total of $44 million (approximately ¥5.3 billion) in the business and has signed an agreement providing for the acquisition of 20% of the shares in KLK Premier Capital Limited ("KLKPCL") from KLK. KLKPCL is an investment holding company, which owns 100% of the shares in Taiko Palm-Oleo (Zhangjiagang) Co., Ltd. ("TPOZ"), a manufacturer and supplier of oleochemicals based in Zhangjiagang City, Jiangsu Province.

Manufactured mainly from palm oil and other natural oils, oleochemicals are used as raw materials for detergents and lubricants. The world market for oleochemicals is currently worth around ¥7 trillion and is expected to grow by over 4% annually (over 7% per annum for China).

KLK is one of the world's leading companies in this area. In 2004, it established TPOZ for the manufacture and sales of oleochemicals in China, which is a growth market. When it completes its expansion project, which is currently in progress, TPOZ will improve the cost efficiency of its production operations and target further enhancement of its competitive advantage by introducing new high-added-value derivative products.

Mitsui and KLK have jointly operated an oleochemical manufacturing and supply business in Malaysia since 1991, but this will be their first joint business project in China. This project will not only further strengthen the partnership between the two companies, but will also improve their access to expanding markets. In addition, Mitsui and KLK will be able to broaden their business base through expansion of their oleochemical derivatives business.

Mitsui will work to improve the value of the TPOZ's oleochemical business operation and deepen its global involvement in this field by deploying its accumulated knowledge and taking the initiative to advance the oleochemical business through its network of companies with sophisticated chemical manufacturing expertise, as well as by utilizing its trading capabilities.

About the Oleochemical Business of TPOZ
The Production base of the company which was established in 2004 is in Zhangjiagang City, Jiangsu Province, China. It deals mainly in the manufacturing and sales of oleochemical products (fatty acids, glycerine, soap noodles, and triacetin).

About KLK
KLK or Kuala Lumpur Kepong Berhad is located at Ipoh, Perak Darul Ridzuan State, Malaysia and was established in 1906. Tan Sri Dato' Seri Lee Oi Hian is the representative of this company dealing mainly in operation of palm plantations, manufacture and sale of oleochemicals.

About Mitsui & Co. Ltd.
Mitsui & Co., Ltd is one of the most diversified and comprehensive trading, investment and service enterprises in the world, with 151 offices in 67 countries as of March, 2013. Utilizing the global operating locations, network and information resources, Mitsui is multilaterally pursuing business that range from product sales, worldwide logistics and financing, through to the development of major international infrastructure and other projects in the following fields: Iron & Steel Products, Mineral & Metal Resources, Infrastructure Projects, Integrated Transportation Systems, Chemicals, Energy, Food Resources, Food Products & Services, Consumer Service, and Innovation & Corporate Development. Mitsui is actively taking on challenges for global business innovation around the world.

Forward-looking statements
This announcement contains forward-looking statements. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest Annual Securities Report and Quarterly Securities Report, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.

This announcement is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.

Source: Mitsui & Co. Ltd.

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