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THE B USI NE SS MAG AZ IN E FOR TH E OILS AN D FATS IN D UST RY

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CONTENTS FEATURES RUSSIA VOL. 34 NO. 4 MAY 2018

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EDITORIAL: Editor: Serena Lim Tel: +44 (0)1737 855066 E-mail: serenalim@quartzltd.com Assistant Editor: Ilari Kauppila Tel: +44 (0)1737 855157 E-mail: ikauppila@quartzltd.com

Clouds over Russian sun

CATALYSTS

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Crucial ingredient in hydrogenation process

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Boosting palm oil extraction rates

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Yeast transforms palm byproducts

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Going palm free

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India’s ports and imports

Transport & Logistics News

Panama Canal to promote Brazil soyabeans Renewable Material News

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Biotech News

Russia gives the green light to Bayer-Monsanto merger deal

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TRANSPORT & LOGISTICS

Biofuels News

Argentine, Indonesian imports impact EU

Reaching a crossroads

MARGARINE & SPREADS

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News

Ferrero reveals list of palm oil source mills

TRADING & PRICE FORECASTING

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Comment

Trump, trade and tariffs

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RUSSIAN SUNFLOWER SEED AND OIL PRODUCERS HAVE LONG STRUGGLED WITH DIFFICULT PRODUCTION CONDITIONS AND DWINDLING SUBSIDIES BUT THE INDUSTRY IS NOW RECOVERING P16

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Diary of Events

36

Statistics

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Contents May 18.indd 1

5/2/2018 9:39:28 AM


NEWS

EDITOR’S COMMENT

Trump, trade and tariffs D

onald Trump has been US President for more than a year since he took office in January 2017 and, for the first time, his trade policies could have a direct impact on our industry with the possibility of a soya war breaking out. On 4 April, China announced US$50bn worth of tariffs on 106 US products including a 25% levy on key US imports such as soyabeans, cars, beef and chemicals. The announcement came less than a day after Trump unveiled tariffs on Chinese imports in the IT, robotics and aerospace sectors as part of a crackdown on what he views as unfair trade practices. Soyabeans are at the top of China’s retaliatory list because they were the biggest US agricultural export to China last year at a value of US$12bn, and because Iowa and other soya-producing states all voted for Trump. The American Soybean Association has already said that a 25% tariff on US soyabeans “will have a devastating effect on every soyabean farmer in America”. But can China avoid US soyabeans altogether? China imports around 90% of the soya it needs to feed its livestock industry – that’s 60% of all globally traded soyabeans – and the United States Department of Agriculture expects the country’s soya imports to hit 100M tonnes in 2018/19. Brazil supplied half of China’s soya imports last year, according to Reuters, and the USA a third (around 33M tonnes). Argentina exported 7M tonnes in 2017/18 but drought is expected to limit its exports this season. This means it is unlikely that China can pull out of the US market entirely. “There simply aren’t enough soyabeans in the world outside of the USA to meet China’s needs,” says Mark Williams, chief Asia economist at Capital Economics. In the short term, Brazil stands to benefit if Trump’s tariffs go through. However, it’s still possible that a trade war won’t break out as the tariffs are not for immediate implementation. The publication of the US list has triggered a two-month public comment and consultation period and Wilbur Ross, US Secretary of Commerce, has told the CNBC news channel that it “would not be surprising” if the USA and China end up at a negotiation table. Trump himself has tweeted that "President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its trade barriers because it is the right thing to do.” However, China has said that Washington is to blame for trade frictions and it is impossible to negotiate under "current circumstances". For investors worldwide, this latest dispute is further illustration of the Trump view of trade – which is adversarial and zero-sum. Countries are rivals, with winners and losers, not partners enjoying mutually beneficial exchange. The danger is that friction and retaliation can only escalate with such a view. Elsewhere in the world, the USA has filed a complaint at the World Trade Organization over India’s export subsidy programmes and there are still NAFTA negotiations with Canada and Mexico to finalise. Increasingly protectionist moves can only add to political uncertainties and unpreditability in international trade.  l

Ferrero reveals list of palm oil source mills

I

talian chocolate and confectionery producer Ferrero has disclosed the location of 116 mills it sources palm oil from following a 19 March Greenpeace report condemning eight largescale consumer goods companies for failing to disclose their palm oil supply chains. In January 2018, Greenpeace challenged 16 global companies to disclose their palm oil suppliers and mills in an effort to crack down on firms contributing to deforestation. The latest Greenpeace report said Nestlé, Unilever, ColgatePalmolive, General Mills, Mars, Mondelez, Procter & Gamble and Reckitt Benckiser had now publicly disclosed their palm oil supply chains. The eight companies that had not disclosed their mills were named as Ferrero, Hershey, Kellogg’s, Kraft Heinz, Johnson &

Johnson, PepsiCo, PZ Cussons and Smucker’s. However, on 21 March, Ferrero published a full list of the mills it sources palm oil from, ahead of a 15 May deadline it had originally agreed with Greenpeace. It added that its list of mills would be updated every six months. The Nutella producer uses around 160,000 tonnes/ year of palm oil, accounting for around 0.3% of global palm oil consumption, the International Palm Oil Congress and Exhibition (PIPOC) heard last November. The Greenpeace report said brands were not on track to meet their commitments to a clean palm oil supply chain by 2020. Government data from Indonesia showed that the country lost 24M ha of rainforest between 1990 and 2015, the NGO claimed.

Noble founder resigns amid lawsuit

T

he embattled Noble Group is facing a US$39M default in bonds, a lawsuit from a top shareholder and the resignation of its founder, World Grain reported on 23 March. The company temporarily halted trading of its shares on the Singapore Exchange on 22 March and was also in the process of seeking a US$3.4bn debt restructuring, the report said. The restructuring had been opposed by some bondholders and shareholders, including Goldilocks Investment Co, which has an 8.1% interest in the company. World Grain said Goldilocks had filed a lawsuit against Noble and some of its former and current senior executives, claiming they falsely inflated Noble’s assets. Noble Group was once Asia’s largest commodities trader. It markets, finances and trades commodities in the energy, metals and mining industries and also operates Capesize, Panamax and Supramax vessels in the dry bulk segment including iron ore, energy coal and grains. It sold 51% of is agricultural unit to China National Cereals, Oils and Foodstuffs Corporation (COFCO) for US$1.5bn in 2014 and finalised the US$750M sale of its remaining 49% share to COFCO in December 2015. The unit was blamed for most of the losses Noble was reporting in 2015, with the group posting its first annual loss in nearly 20 years on 25 February 2016 – a net loss of US$1.67bn for the year ending 30 December 2015 against a profit of US$132M a year earlier. Since then, the company’s market value had fallen from US$6bn to US$114M amid record losses and the shrinking of its businesses and it had been dogged by allegations of accounting irregularities, with Iceberg Research questioning its financial statements in 2015, World Grain said. Noble said it was consulting with its legal advisors and “intends to vigorously resist any and all allegations or claims made against it”, the World Grain report said.

2 OFI – MAY 2018 www.ofimagazine.com

Comment and News.indd 1

4/30/2018 10:09:09 AM


NEWS

USA-China trade tensions impact US soyabean futures

U

S soyabean futures have taken a dive after China announced its plans to impose tariffs on key US imports – including soyabeans – in retaliation against the US government’s plan to introduce duties on Chinese IT products. Following China’s announcement, the futures fell by 40 cents/bushel, said Biodiesel Magazine on 4 April. “At a projected 2018 crop of 4.3bn bushels, soyabean farmers lost US$1.72bn in value for our crop this morning alone,” John Heisdorffer, president of the American Soybean Association (ASA) said on that date.

“That’s real money lost for farmers and it it entirely preventable.” China’s list of 25% tariffs on US goods covered 106 items with a trade value mirroring the US$50bn price tag attached to the US tariffs, wrote Reuters on 4 April. If implemented, China’s tariffs would hit major US exports, including soyabeans, frozen beef, cotton and other agricultural goods that are largely produced in states that supported Trump during the 2016 presidential elections. The USA, on its part, targeted products – such as machine parts

and light-emitting diodes – that benefited from China’s industrial policy and the Made In China 2025 programme to replace advanced technology imports with domestically produced products, in addition to solar panels and aluminium. However, neither trade action would be implemented immediately, and the publication of the US list had triggered a two-month public comment and consultation period, the conclusion and results of which would affect China’s measures, Reuters said. The ASA and state soyabean groups were calling on the White

A

rgentina’s national food health and quality service Senasa is working to update regulations in order to facilitate the import of US soyabeans into the country for the first time in more than 20 years. Due to the last imports from the USA having been in 1997, Argentina’s current sanitary regulations would not allow the arrival of bulk ships carrying US soyabeans, Senasa president Luis Negri told Agricensus on 16 April. “The first issue is that we need to update the sanitary protocols between Argentina and the USA. The second issue is we need to find out what to do with the transgenics that are approved in the USA but that are not currently approved in Argentina,” Negri said. Senasa had already appointed technical teams to work on the two issues and Negri expected the first soyabeans to arrive in Argentina later in the year. The United States Department of Agriculture (USDA) said that in early April, Argentinian buyers had purchased four cargoes of soyabeans –

PHOTO: PIXABAY

Argentina imports first US soyabeans in 20 years

totalling 240,000 tonnes – which would likely be delivered in October or November. In addition to importing US soyabeans, Argentine biodiesel producer Ecofuel has become the first to export biodiesel to Canada in the aftermath of the USA imposing tariffs on the fuel, wrote Hellenic Shipping News on 16 April. The company shipped 29,000 tonnes of biodiesel to Canada in March and was scheduled to make a similar shipment in April, but the company said the Canadian market could not fully compensate for the loss of exports to the USA.

LDC buys China soya mill Iceland to remove palm oil

L

ouis Dreyfus Company’s LDC (China) Trading Co subsidiary has acquired Chinese Sinarmas Natural Resources Foodstuff Technology (Tianjin) and its soyabean crush and refining facilities. Located in the Lingang Economic Area in the Binghai New Area district of Tianjin City, the facility had a soyabean crush capacity of 3,600 tonnes/ day, producing soyabean meal and crude soyabean oil, and a refining capacity of roughly 1,000 tonnes/ day of refined vegetable oil, said LDC in a 3 April statement. The facility also included bottling, filling and packaging lines alongside storage facilities. The acquisition, agreed in November 2017, reflected the firm’s confidence in China’s “dynamic agricultural processing sector,”said LDC CEO Gonzalo Ramírez Martiarena. LDC is a major supplier of soyabeans to China’s domestic crushing industry and it operates three soyabean crush facilities in the provinces of Guangdong, Hebei and Jiangsu. LDC did not disclose the value of the acquisition.

U

K frozen food supermarket chain Iceland has pledged to remove palm oil from all its ownbrand food products by the end of 2018 due to the “unsustainable” status of the oil. Having already removed palm oil from more than half of its 130 own-label products, the company was now investing £5M (US$7M) to become the first major UK supermarket chain to completely do away with palm oil, BusinessGreen wrote on 9 April. Since the beginning of the year, Iceland had introduced 100 new palm oil-free product lines and aimed to double that number by the start of 2019. It would replace the palm oil with alternatives such as sunflower and rapeseed oil or butter, depending on the requirements of each product. The move was motivated by the company’s belief that there was no verifiably sustainable palm oil currently available on the mass market. According to Reuters, the Council of Palm Oil Producing Countries (CPOPC) protested the decision, saying that Iceland was “misleading consumers on the environmental benefits of other vegetable oils”.

House to reconsider imposing the tariffs on China. “China has said that its 25% tariff will only go into effect based on the course of action the US administration takes,” said Heisdorffer. However, the trade spat could be positive news to Indonesian and Malaysian crude palm oil (CPO) producers, Danareksa Sekuritas analyst Yudha Gautama told Jakarta Post on 9 April. According to Gautama, the higher soyabean prices resulting from the duties could cause Chinese consumers to shift to CPO products.

IN BRIEF KAZAKHSTAN: Kazakhstani Tag-Tin, a subsidiary of agri and industrial holdings firm Vostok Agro, is getting ready to launch the country’s second processing facility manufacturing both sunflower and rapeseed oils, with a goal to export to the Chinese market. The firm was building the 50,000 tonnes/year plant as part of an ongoing effort to diversify production and process its own raw materials, wrote The Astana Times on 16 March. The 1bn tenge (US$3.13M) plant, funded partially by the Kazakhstani government, was expected to come online in May. USA: US agribusiness giant Archer Daniels Midland Co (ADM) has announced a reshuffling of its organisational structure, rearranging its current business segments into four new units. The new units – Oilseeds, Origination, Nutrition and Carbohydrate Solutions – better reflected the company’s operating structure, ADM said in a statement on 19 March. The changes would be reflected in ADM’s financial results beginning with the first quarter of 2018, to be presented on 1 May. ADM’s reshuffle was the latest in a chain of organisational changes at leading agri and consumer goods companies, with China’s COFCO splitting its oilseeds and grains operations into two separate units and Unilever organising into three separate divisions in March.

3 OFI – MAY 2018 www.ofimagazine.com

Comment and News.indd 2

4/30/2018 10:09:10 AM


NEWS

RUSSIA: BioTechnologies, a Russian sunflower processing firm, has developed a process to extract high-value plant protein from sunflower press cakes, a by-product of sunflower oil production. Sunflower press cake contains 39% protein but due to limited commercial applications it wasn’t widely produced, BioTechnologies commercial director Nikita Golikov told Food Navigator on 14 March. Using a patented mechanical separation progress utilising ultrafiltration membranes, BioTechnologies was able to extract protein concentrate, fibre and polysaccharides from the sunflower cake. “We can get up to 90% [protein concentration] but it was too expensive to produce. 80% is more economically effective,” said Golikov. In addition to its first plant in the Altai Mountains, the company’s second production plant was scheduled to come online in 2019 near the Belarussian border.

Pakistan plants more olive trees

A

total area of 5,665ha will be planted with 120,000 olive trees in Balochistan province, southwest Pakistan, as part of a campaign to promote olive cultivation and increase the production of edible oils, Olive Oil Times reported on 19 March. Half of the new saplings were grown in nurseries on-site while the rest were imported from Italy. The project was part of a campaign by the Pakistan Agriculture Research Council to promote the province’s agricultural sector while introducing alternative crops for local farmers, the report said. There were also plans to build a new olive oil mill in the provincial capital, Quetta. In other parts of the country, there were plans to plant 3M olive trees in the northernmost region of Gilgit-Baltistan to combat soil erosion, landslides and flash flooding. Some 2.4M olive trees were also being planted in the Pothwar region in Pakistan’s northeastern corner under a current five-year project running until 2020, also managed by PARC.

Deoleo settles olive oil lawsuit

S

panish olive oil manufacturer Deoleo’s US division has agreed to a US$7M settlement in a class-action lawsuit stemming from alleged mislabelling of its extra virgin olive oil products. The company, which produces the popular Bertolli brand of olive oil and – according to Euromonitor – held a 10.4% of the total global olive oil market, also agreed to revamp its packaging and testing protocols, wrote Food Dive on 12 April. In the case against Deoleo USA, filed in 2014, the plaintiffs alleged that the firm had falsely labelled its products as “imported from Italy” and that they might not qualify as extra virgin quality due to being exposed to sunlight and heat before reaching the consumer. The settlement required

PHOTO: WIKIMEDIA COMMONS

IN BRIEF

Deoleo to stop using the phrase “imported from Italy” on its labels unless the products in question were manufactured by using only olives grown and crushed in Italy. The firm would also have to adopt “stronger testing practices” to ensure its olive oil adhered to extra virgin quality standards.

Deoleo USA’s Spanish parent company said in summer 2017 that it was planning to spend US$25M on product relaunches and marketing in Italy and the USA, which together made up 60% of its profits. The company was also investing €50M (USD$61.4M) to boost several of its leading brands, according to a 6 April statement. Deoleo intended to strengthen its Bertolli, Carbonell and Carapelli brands, with the Bertolli brand set to undergo a global refresh. It also said it would launch a premium product range under the Carapelli and Hojiblanca brands in Spain, a renewed product range for Carbonell and another premium line under the Bertolli and Carapelli brands, which would include table olives.

Davao Oriental aims to improve palm oil production

T

he Philippine province of Davao Oriental is looking to establish a new palm oil plantation and two mills in a bid to become one of the leading suppliers of palm oil on the island of Mindanao. Funding for the development of the 5,000ha allotted to palm oil production in the municipality of Cateel would come from the Development Bank of the Philippines (DBP), which had agreed to loan 500M peso (US$9.62M) for the establishment of the mills and 1.1bn peso (US$21.1M) for planting and maintaining the palms, said

SunStar Davao newspaper on 10 April. This project would be carried out in collaboration between the provincial government of Davao Oriental, vice president of Davao Oriental State College Roy Ponce and an unnamed Chinese-Malaysian palm oil expert, according to SunStar Davao. Dayanghirang said two types of palm oil mills would be established in Cateel, including one crude oil mill, funded by the DBP loan, and one refinery mill for which additional budget was still pending.

“The new technology allows us to put together the crude palm oil and refinery mills on the 5,000ha. We will now be able to supply the Mindanao market with palm oil,” said Ednar Dayanghirang, chief of staff of the provincial governor Nelson Dayanghirang. He added that Mindanao currently imported approximately 80% of its palm oil consumption. Dayanhirang expected a formal agreement for the establishment of the plantation and the mills to be signed in April, while a feasibility study on the project would be reviewed by May.

Fatty acid salts confirmed safe as food additives

T

he European Food Safety Authority (EFSA) has confirmed that sodium, potassium, calcium and magnesium salts of fatty acids are safe when used as food additives. Its scientific opinion, made after the EFSA’s Panel on Food Additives and Nutrient Sources added to Food (ANS) re-evaluated previous studies – said there was no need to set an acceptable daily intake (ADI) standard for fatty acid salts, wrote Food Navigator on 6 March. Sodium, potassium and calcium salts of fatty acids are usually labelled as E470a and magnesium salts as E470b on food packaging and they are used as emulsifiers and stabilisers. The EFSA’s Scientific Committee on Food originally reviewed E470a and E470b in 1991 and it concluded that there was no need to establish ADIs for myristic, stearic, palmitic and oleic fatty acids and their salts. In its latest opinion, ANS concluded that there were no safety concerns regarding either E470a or

E470b at reported uses and use levels and that it was unlikely that they would be used in combination in a single food product. As such, the panel performed the exposure assessment for the fatty acid salts separately per food category and not together. Nonetheless, ANS recommended that the European Commission should revise the EU specifications for additives by including maximum limits on trans fatty acids, as E470a and E470b could be manufactured through glycerolysis of hydrogenated oils and fats that could contain “significant amounts” of trans fats. The panel also encouraged the Commission to rephrase the definition of a fatty acid salt to clarify that the fatty acids used as raw materials for the salts must come from edible fats and oils. UK-headquartered Food Additives and Ingredients Association said none of the reviewed additives were widely used in the industry but the approval was positive news in any case.

4 OFI – MAY 2018 www.ofimagazine.com

Comment and News.indd 3

4/30/2018 10:09:11 AM


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BIOFUELS NEWS

Argentine, Indonesian imports impact EU T

he EU’s removal of duties on Argentine and Indonesian biodiesel could result in a flood of imports starting in April and the closure of some small producers, according to the head of a major German biodiesel producer. “I fear the decisions to remove the antidumping duties will result in a flood of unfairly priced biodiesel from Argentina and Indonesia in the EU,” said Claus Sauter, chief executive of German biofuels producer Verbio AG, in a 29 March Reuters report. “I expect that some EU biodiesel producers, especially small-sized companies, will have to reduce production or even close.” The EU imposed anti-dumping duties on biodiesel imports from Argentina and Indonesia in 2013. The duties, however, faced a series of legal challenges at the European Court of Justice and the World Trade Organization.

COLOMBIA: On 1 March, Colombia raised its biodiesel and ethanol mandates both to 10% in order to combat air pollution, with the exception of three regions suffering from smuggling across the Venezuelan border, said Biofuels Digest on 14 March. The previous blending mandate for biodiesel ranged from 2% to 9% depending on the region, while the ethanol madate was 6%, apart from the Antioquia department where it was 8%. CHINA: The government of China is considering imposing retaliatory duties on US ethanol imports to counter US tariffs on Chinese steel and aluminium. China’s Ministry of Commerce had prepared a list of 128 US products it could impose duties on, including ethanol, wrote Ethanol Producer on 23 March. Ethanol groups Renewable Fuels Association and Growth Energy both urged the US government to quickly resolve the trade issue due to the Chinese market’s importance. BOLIVIA: Bolivia is investing US$1.6bn to invest in sugarcane production to achieve a 25% ethanol blending rate by 2025, according to reports in the Latin American Herald Tribune. The action plan included a goal to plant 155,000ha of sugarcane by 2025 to produce 8.2M litres of ethanol and 6.6M litres of E85 grade ethanol/ petrol blend.

poor margins, the company has taken the difficult decision to cut back production in the region,” an ADM spokeswoman said at the time. In early April, German biofuels producer Natural Energy West (NEW) also halved its biodiesel output due to surging imports. The company slashed production at its 240,000 tonnes/year capacity plant in Marl, Germany, for an indefinite period due to “dumped biodiesel imports from Argentina and Indonesia”, reported Reuters on 9 April. “If the German government and the European Commission do nothing against the unfair trading practices undertaken by Argentina and Indonesia, the European industry – and the farming sector that supports it – will face damage that threatens its existence,” said Natural Energy West CEO Detlef Volz.

Indonesia to expand biodiesel use Agri groups call Energy and Mineral for crop fuels Resources Ministry intends to Indonesia’s increase and expand the country’s national biodiesel mandate in order to cut fossil fuel imports and boost the consumption of palm oil. The ministry was looking to allocate 3.46bn litres for biodiesel in 2018 – up from the previous year’s estimated 2.89bn litres – and expand the biodiesel mandate to cover the train sector from May and the mining sector from July, Reuters said on 3 April. The increased biodiesel usage was intended to reduce Indonesia’s dependence on foreign oil, slash greenhouse gas emissions and use up some of the world’s largest palm oil producer’s surplus production. The transportation and power sectors already had a B20 (20% biodiesel blend) mandate in place, and the new rules would set a B5 and B10 mandate for the rail and

PHOTO: ERWINFCG

IN BRIEF

Both bodies have ruled against the EU measures. The Reuters report said that the EU had removed duties on biodiesel imports for 13 Argentine and Indonesian producers following the end of legal proceedings at the European Court of Justice. “Various unfair export taxes and other state support mean Argentine and Indonesian biodiesel can be sold in Europe at US$50-60/ tonne cheaper than EU biodiesel producers can buy raw materials such as rapeseed oil,” Sauter said. US agribusiness group Archer Daniels Midland Co already announced on 23 March that it would temporarily suspend production at its 275,000 tonnes/year biodiesel plant in Mainz, Germany, because of increasing cheap biodiesel imports into the EU. “With continued imports and increasingly

E

mining sectors, respectively. The energy ministry document seen by Reuters also included a provision to increase the amount of biodiesel allocated to the stateowned energy firm PR Pertamina and privately-held PT AKR Corporindo to 1.47bn litres from the previous 1.41bn litres for the May to October period. In 2015, Indonesia imposed an export tax of US$50/tonne on crude palm oil and US$30/tonne for processed palm oil products and used part of the tax revenue to subsidise its biodiesel industry, Reuters wrote.

U farmer and agri-cooperative associations Copa and Cogeca have urged the EU to maintain the 7% share of crop-based biofuels used in transport until 2030. “We need real blending rates that ensure renewables replace fossil fuels, not a policy that uses artificial multipliers to inflate the results,” said Copa and Cogeca secretary general Pekka Pesonen on 26 March. Pesonen urged the EU to establish a binding blending obligation of at least 14%. Copa and Cogeca also called for the removal of all multipliers that gave a misleading picture of the real environmental impact of renewable electricity in transport and said palm oil and its derivatives should be rejected as long as sustainability problems remained.

‘Unfair’ imports damaged US biodiesel industry

T

he US International Trade Commission (ITC) gave a final ruling on 3 April determining that the country’s biodiesel industry has suffered due to unfairly dumped Argentine and Indonesian imports. The 4-0 vote was the last remaining step before the USA could impose final antidumping orders against the two countries, the US biodiesel trade association National Biodiesel Board (NBB) said in a statement. “This vote finalises the case

to address the harm that unfair trade practices have had on the US biodiesel industry,” said NBB CEO Donnell Rehagen. In March, the US Department of Commerce (USDC) imposed final antidumping fees ranging from 60.44% to 86.41% for Argentine producers and 92.52% to 276.65% for Indonesian producers. The USDC also gave a final countervailing duty determination in November 2017, which set duty deposit rates of 71.45-

72.28% for Argentina and 34.4564.73% for Indonesia. According to China’s state news channel Xinhua, the Indonesian government had prepared a lawsuit with the World trade Organization (WTO) to challenge the US decision. The anti-dumping and countervailing duty investigation was initiated in early 2017 by the NBB Fair Trade Coalition, which claimed that foreign producers had taken up a disproportionate share of the US market.

6 OFI – MAY 2018 www.ofimagazine.com

Biofuel news.indd 1

4/30/2018 10:18:46 AM


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BIOTECH NEWS

IN BRIEF INDIA: A complaint submitted to India’s food safety authority on 16 March is calling for immediate action against the alleged illegal import and sale of genetically modified (GM) edible oil products in India. In the complaint, the Coalition for GM-Free India (CGMFI), an NGO, claimed that certain soyabean and canola oil brands were being sold in major cities despite them being prohibited by the Food Safety and Standards Authority of India (FSSAI), Times of India reported. Kavitha Kuruganti, co-governor of CGMFI claimed that the illegal oil products “did not even have the labelling” in place marking them as GM products. According to section 22 of India’s Food Safety and Standards Act 2006, the manufacture, sale, distribution or import of GM foods is prohibited unless specifically detailed. USA: Monsanto has developed the first agricultural sprayer system cleaner designed to deactivate its dicamba herbicide, the company said on 24 April. Developed with US agrichem firm Adjuvants Unlimited, the system was based on a chemical process that deactivated certain pesticide active ingredients – including dicamba – in rinse and cleanout processes. The sprayer would be available this season, Monsanto said.

Russia gives the green light to Bayer-Monsanto merger deal

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ussian antitrust authority Federal Anti-Monopoly Service (FAS) has given a green light to German chemical firm Bayer’s planned US$62.5bn merger with the American agrichem developer Monsanto, despite an earlier six-month delay on the decision. Bayer said it had agreed to transfer certain technologies in seed breeding and digital farming to Russian recipients over the next five years, Reuters wrote on 20 April. It would share genetic know-how on rapeseed, soyabean, vegetable, corn and wheat seeds in addition to granting “non-discriminatory” access to digital farming technologies once they had been made available in Russia. In February, Bayer sued the FAS for its November 2017 decision to delay its final determination by six months. FAS concluded in early November that the merger, which would result in the creation of the largest seed and agrichemical firm in the world, could lead to its increased dominance in all affected Russian markets

and stop others from entering the market. Bayer also said that it had in mid-April raised €3bn (US$3.7bn) by selling a 3.6% stake of the company to a Singaporean state-owned investment company, with further plans to raise capital in the pipeline. On 26 April, Bayer further announced that it had officially agreed to divest €1.7bn worth of crop science assets to its compatriot chemicals firm BASF to comply with the requirements of the EU. n In another development, Bayer had reportedly reached a preliminary understanding for the Monsanto merger with the US Department of Justice (DOJ), Reuters and The Wall Street Journal wrote on 9 April. Quoting unnamed sources close to the matter, the reports said Bayer had agreed to divest further seed and treatment assets to German chemicals firm BASF and to make concessions related to digital agriculture. The Bayer-Monsanto merger has been approved by Australia, Brazil, China and the EU.

Six farmers allowed to spray dicamba past cut-off date

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n Arkansas judge has allowed six farmers to spray Monsanto’s controversial dicamba-based herbicide on their crops after a 15 April cut-off date despite concerns over its potential to cause damage to surrounding crops not engineered to tolerate it. Arkansas banned the spraying of dicamba between 16 April and 31 October after it caused crop damage by evaporating from soyabean fields and drifting over to areas where crops were not

engineered to resist it. Pulaski County Circuit Judge Tim Fox gave six farmers permission to spray the chemical even though he earlier dismissed a case where growers tried to sue the Arkansas State Plant Board to remove the cut-off date, said Farm Ireland on 3 April. Fox’s dismissal was based on an Arkansas Supreme Court decision stating that the state could not be a defendant in court, but he said the farmers were exempt from the

spraying deadline as their inability to sue violated their due process rights. Thousands of US farmers filed complaints or sued Monsanto last year for crop damage linked to dicamba last summer. Other states have also limited its use. Monsanto maintains that dicamba is safe to use throughout the growing season if farmers follow its extensive usage instructions. (see also News brief, left).

EU Commission plans to revamp EFSA transparency rules to boost trust

he European Commission has published a draft regulation that would revamp the European Food Safety Authority’s (EFSA) risk assessment process so that it can publish confidential data deemed essential to protecting public health. The new regulation would revise eight pieces of legislation to conform with the EU’s general food rules and to boost transparency regarding GMOs, feed additives, smoke flavourings, food contact materials, food additives, food enzymes and flavourings, plant protection products and novel foods, said FoodNavigator on 12 April. It would create a common European register of commissioned studies to guarantee that firms applying for product authorisation were not withholding studies with unfavourable results, The studies would be made publicly accessible at the EFSA’s website, where the public – including scientists – could search, download and print them. Members of the European Parliament and

PHOTO: PIXABAY

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member states still need to approve the proposal, but the Commission hoped that the draft would become law by mid-2019. The Commission also said companies’ intellectual property rights and data exclusivity would be respected according to current EU law.

However, confidential information could be published for two reasons, namely when urgent action was necessary to protect public and animal health or the environment or when the information was part of the conclusions of an EFSA opinion and related to foreseeable health effects. Martin Pigeon, food policy campaigner at Corporate Europe Observatory, expressed concern about the caveat that would require those wanting to quote the published information to request permission from the company that submitted it. “This creates a huge risk that industry will block any scientific scrutiny of the EFSA’s assessment of their products,” Pigeon said. According to FoodNavigator, the proposal came on the back of a European Citizens’ Initiative from October 2017, titled ‘Ban glyphosate and protect people and the environment from toxic pesticides’, which included demands to increase the transparency of scientific studies submitted to EFSA for evaluation.

8 OFI – MAY 2018 www.ofimagazine.com

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9 OFI – MAY 2018 www.ofimagazine.com


TRANSPORT & LOGISTICS NEWS

Panama Canal to promote Brazil soyabeans

he Panama Canal Authority (PCA) has signed an agreement with the Association of Soybean and Corn Producers of Mato Grosso (Aprosoja) to promote the Panama Canal’s position in the logistics chain from northern Brazil to Pacific ports. The agreement would see the PCA and Aprosoja conduct joint marketing activities and share market and trade flow information to support modernisation programmes at the canal, World Grain reported on 19 March. The PCA said it would look to promote the role of its Panamaxclass locks for soya and corn transportation from northern Brazil to Asian markets. “The increased capacity

IN BRIEF UKRAINE: Global grain trader Cargill and Ukrainian terminal company MV Cargo have begun the last phase of construction of a grain terminal at Yuzhny Port in Ukraine. The terminal would feature 14 silos and have a throughput capacity of 5M tonnes/year of grains and the daily handling capability of 790 rail cars, said World Grain on 5 March. The project, launched in 2015, originally had an estimated budget of US$100M, but this has since grown to US$150M. In April 2017, the International Finance Crop, part of the World Bank, agreed on a US$37M loan for the terminal project. Ukraine is the world’s largest exporter of sunflower seeds. FRANCE: French agriproduct trader Soufflet Group is nearly finished with the construction of an expansion to its port facilities in La Rochelle, France. The US$40M storage and loading facility would help the firm increase its export capacity at the port by more than 30%, said World Grain on 29 March. The expansion was expected to conclude in April and would increase Soufflet’s storage capacity at La Rochelle by 50% to 188,000 tonnes. Soufflet Group trades in various agri and food goods, including oilseeds and cereals.

PHOTO: PIXABAY

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afforded to us by the expanded canal has had far-reaching positive impact across segments and allows us to access new markets, which could include freight from

ports such as those in northern Brazil,” said Jorge Luis Quijano, administrator at the PCA. “This agreement with Aprosoja further strengthens our common

goal of promoting regional trade growth,” Quijano added. The PCA had signed 36 similar Memoranda of Understanding with commercial associations, ports and maritime organisations, but the Aprosoja agreement was the first of its kind the association had made with a Latin American organisation. Between October 2017 and February 2018, approximately 1.039M tonnes of dry bulk – which includes soyabeans and other grains – passed through the Panama Canal on Panamax-class vessels, according to statistics from PCA. Aprosoja, founded in 2005, is a non-profit organisation comprised of soyabean and corn producers.

IMO sets first industy-wide emission scheme

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he International Maritime Organization (IMO) has set a definitive target for reducing emissions across the entire global maritime industry for the first time in history. The IMO Greenhouse Gas (GAG) strategy set an overall efficiency goal to cut emissions from maritime traffic by 40% by 2030 when compared to 2008 levels and advancing to 5070% reduction by 2050, wrote Maritime Journal on 13 April. “This is a ground-breaking agreement, a Paris Agreement for shipping,” said International Chamber of Shipping (ICS) secretary general Peter Hinchcliffe, likening the strategy to the Paris climate agreement

of 2015.“We are confident this will give the shipping industry the clear signal it needs to get on with the job of developing zero CO2 fuels.” But Hinchcliffe added that the monumental scale of the project was “highly ambitious” given current projections for trade growth. Some governments would have preferred even more ambitious targets, he said, but even the 50% reduction by 2050 could only be realistically achieved by developing zero CO2 fuels and putting them into very widespread use. The ICS believed that if the 2050 target could be successfully met, it would quickly

lead to a wholesale switch to no-carbon emission fuels in the industry. BIMCO, the world’s largest shipping association representing 56% of the world’s tonnage, welcomed the strategy, calling it “ambitious but not impossible”. “The strategy reinforces existing IMO regulations to enhance the energy efficiency of ships and sets out the longterm goals,” said BIMCO deputy secretary general Lars Robert Pedersen. Pedersen noted that emissions from maritime shipping had peaked in 2008 and had been decoupled from global economic growth.

G3 to construct two new grain elevators in Canada

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anadian grain handler G3 Canada, which has contracts for canola and soyabeans, is planning to build two new elevator facilities in the central Canadian provinces of Alberta and Saskatchewan. The Alberta facility, to be located south of the city of Wetaskiwin, would be G3’s first primary elevator in the province, said World Grain on 20 March. The company also intended to further expand its grain origination network in Saskatchewan by building a primary elevator near Maidstone. “We’re excited to be able to show farmers in the Wetaskiwin and Maidstone areas what G3 has to offer their business,” G3 CEO Karl Gerrand said. “Farmers near both new facilities will benefit from G3’s service model, providing fast truck turnaround and strong delivery opportunities.” Construction was set to begin in April, pending regulatory approval, and both elevators were projected to start up before the 2019 harvest.

According to the company, the new elevators – both of which were slated to have 42,000 tonnes of storage capacity – could save farmers significant time, allowing grain trucks to be unloaded in less than five minutes. The Maidstone elevator would be located along a Canadian National Railway line, while the Wetaskiwin facility was on a Canadian Pacific rail. These locations meant the elevators were well placed to supply G3’s Vancouver terminal, which was set to become operational in 2020. G3 was also building additional primary elevators near Saskatoon and Melville in Saskatchewan, which were nearing completion and expected to come online in summer 2018. G3 is a joint venture between Bunge and Saudi Agricultural and Livestock and Investment Co and has 19 grain storage facilities with a total storage capacity of 28.725M bushels.

10 OFI – MAY 2018 www.ofimagazine.com

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11 OFI – MAY 2018 www.ofimagazine.com


R E N E WA B L E M AT E R I A L S N E W S

INDIA: Universal Biofuels, the Indian subsidiary of US industrial biotech firm Aemetis, is producing glycerine at above nameplate capacity, with demand exceeding supply, Aemetis said on 12 April. Capacity at the Kakinada glycerine unit was approximately 18,000 tonnes/year and it was operating above nameplate capacity by importing crude glycerine from Argentina and other biodiesel production countries, said Aemetis chairman and CEO Eric McAfee. “As our plant scales up biodiesel production using a new pretreatment unit, the refined glycerine unit has grown to be an important source of consistent revenues supplying the production of consumer and paint products in India.” USA: Speciality chemicals producer Elevance Renewable Sciences launched a new plantbased emollient on 9 April, made from non-GMO coconut oil and its own soya-based polymer. The company said its Soft CG200 low viscosity gel could be used to produce formulations with a smooth creamy texture for creams, lotions, body washes, soaps and colour cosmetics without silicone, petrolatum, polyethylene glycol (PEG) or paraben. This was in response to growing market demand for plant-based, silicone-free ingredients and specialised non-GMO and vegan friendly products, said Elevance commercial director Michelle Morie-Bebel.

BASF closes sale of Mexican oleo-surfactant unit to Stepan

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erman chemical firm BASF closed the sale of part of its oleochemical surfactants business in Mexico to the Stepan Company on 26 March. The sale – first announced in June 2017 for an undisclosed price – includes the Mexican oleochemical surfactants product portfolio and associated intellectual property, as well as the production assets at the Ecatepec manufacturing site in Mexico state. The site is located close to Mexico City and has over 50,000 tonnes of capacity, 124,000 square footage of warehouse space, a large laboratory and office space. Illinois-headquartered Stepan is a global manufacturer of speciality and intermediate chemicals and surfactants, key ingredients in consumer and industrial cleaning compounds and

in agricultural and oilfield solutions. It has 18 manufacturing sites in North and South America, Europe and Asia. “This acquisition supports the company’s growth strategy in Latin America and significantly enhances Stepan’s market position and supply capabilities for surfactants in Mexico, positioning us to grow in both the consumer and functional markets for surfactants, said Stepan CEO F Quinn Stepan Jr. BASF said the sale would allow the company to focus on other areas of its portfolio. “With this divestiture, BASF Care Chemicals will help our customers in Mexico by focusing on more strategic aspects of our home care, personal care and industrial solutions portfolio, including optical effects, speciality co-surfactants, actives, emulsifiers and polymers,” BASF said.

BASF expanding capacity for APG surfactants

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erman chemical firm BASF announced on 1 February that it would increase its global alkyl polyglucosides (APG) capacity with two production expansion projects at sites in Cincinnati, Ohio, and Jinshan, China. APGs are a class of nonionic surfactants widely used in a variety of household and industrial applications derived from sugars, usually glucose derivatives, and fatty alcohols. “With Cincinnati coming online in 2018 and Jinshan in 2019, BASF aims to better serve north American and Asian customers from regional supply points while reducing cross-regional volume flows and shortening lead times,” the company said. The expansions would also

PHOTO: BASF

IN BRIEF

APG SURFACTANTS ARE USED IN PERSONAL CARE AND LAUNDRY PRODUCTS

ease capacity concerns at BASF’s APG plant in Duesseldorf, Germany. “This investment will add value to our customers’ formulations with renewable feedstock-based mild surfactants for personal

and home care applications,” said Scott Thomson, senior vice president, care chemicals, North America, BASF. APGs are surfactants used for mildness and foam improvement in personal care applications such as facial washes and shampoos. They are also used in dishwashing detergents, laundry and surface cleaning products. “The home and personal care market is increasing its focus on ultra-mild ingredients and APGs play an important role in those formulations,” BASF said. “Additionally, APG benefits include compatibility with various surfactants and other ingredients due to their non-ionic nature and manufacturing from 100% natural and renewable feedstocks.”

40% of US rendered fat exports used for biodiesel and renewable fuel

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he global use of US rendered fat is now mostly for biodiesel and renewable fuel, as well as for the oleochemical industry, with 40% of all US rendered fat exports utilised for biodiesel and renewable diesel production, according to the National Renderers Association (NRA) US market report, published in the April 2018 edition of Render magazine. While US fat exports had fallen 30% in the last five years, Singapore had become the second largest export market for US tallow, importing about 120,000 tonnes for renewable fuel production. “The EU has continued to be the largest US export market for used cooking oil with 176,000 tonnes, or close to 60%, of total yellow grease exports going to biodiesel and renewable fuel production,” the NRA said. As a major livestock and meat processing

country, the USA is a leading producer of rendered products, along with the EU, Brazil, Argentina and Australia. Rendered fat exports from the USA in 2017 totalled 736,700 tonnes, the report said. The NRA forecasts a rise in US production of rendered products with increased livestock production. “Over the next 10 years, more than 474,000 tonnes of animal protein meals and 811,000 tonnes of rendered fat are projected to be added in the supply chain.” While global demand for fat as a biodiesel/ renewable energy source would offset the added supply, additional international demand was needed to take up the increased amount of animal protein meals, in a market already awash with an oversupply of soyabean meal. “The key for rendered animal protein meals will be to continue to find niche markets for

these products, such as the aquaculture and pet food industries.” The report said US rendered product production in 2017 rose 1.4% from 2016 to total 10.5M tonnes. Production totaled 5.7M tonnes for fat and 2.6M tonnes for tallow. Domestic consumption of rendered products rose 2% in 2017 to 7.1M tonnes, and 5% over the past five years, due to increased fat use in the biodiesel/renewable fuel sector. Domestic fat use for biodiesel/renewable diesel was 1.2M tonnes in 2017, a 4.3% rise from 2016. Demand from the renewable energy sector is projected to grow dramatically with Diamond Green, in particular, nearly doubling production at its renewable diesel plant in Louisiana, from 150M to 275M gallons/year, increasing its feedstock need from 500,000 tonnes to over 1M tonnes.

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R E N E WA B L E M AT E R I A L S N E W S

Kolb buys Elementis surfactants unit

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olb Distribution AG, a subsidiary of Malaysia’s Kuala Lumpur Kepong Berhad (KLK) plantation group, finalised its acquisition of Elementis’ surfactants business on 28 February. The UK chemicals maker’s €39M (US$48M) sale of its Delden, Netherlands-based surfactants unit was first announced in December 2017 after a strategic review decided the unit did not fit with Elementis’ wider strategy due to a lack of scale and capital. “By exiting surfactants, we not only generate cash but eliminate a strategically disadvantaged business for us, simplify our supply chain and are free to reallocate material capital and internal resources to focus on higher margin growth opportunities,” Elementis CEO Paul Waterman had said when announcing the sale. The unit has now been renamed KLK Kolb Specialties BV and will continue to manufacture surfactants, paper process chemicals and chemical

intermediates. In addition, it will continue to supply products for Elementis’ speciality products unit in a long-term supply agreement. Switzerland-headquartered Kolb’s main products are fatty alcohol and acid ethoxylates, fatty amine ethoxylates, phosphate esters, alcohol sulphates and sulphonates, ester quats, triglyceride ethoxylates, sorbitan esters and other products used for wetting, emulsifying, low foaming, solubilising, viscosity modifying and viscosity stabilising. KLK said it planned to expand the existing Kolb portfolio in terms of range and market coverage. “The use of the Delden site as another hub for KLK’s market penetration strategy will further accelerate growth in the group’s downstream chemical specialties business in Europe.” KLK Oleo operates oleochemical complexes in Malaysia, Indonesia, China and Europe and had manufacturing revenues of US$2.28bn in 2017.

GGC plans glycerine refining and oleochemical facilities

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hailand’s Global Green Chemical Plc (GGC) is planning to build a 500M baht (US$16M) glycerine refinery production facility and a 600-900M baht (US$19-29M) oleochemical plant, according to a Bangkok Post report earlier this year. The subsidiary of Thailand’s largest petrochemical and refining

company – PTT Global Chemical Public Company Ltd (PTTGC) – said in the report that the projects were awaiting board approval and would strengthen the company’s offerings in downstream products for creams, lotions, skin care and cleansing products. GGC currently produced 14,000 tonnes/year of oleochemical

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products and 20,000 tonnes/year of refined glycerine. Its second 200,000 tonnes/ year biodiesel unit was scheduled to start operations in third quarter 2018. It is also planning a 7bn baht (US$0.22bn) biochemical complex in a joint venture with Kaset Thai International Sugar Corporation.

IN BRIEF GERMANY: Chemicals firm BASF said on 18 April that it plans to switch some 330 palm oil-based products to Roundtable of Sustainable Palm Oil (RSPO) Mass Balance (MB) standard during 2018. MB is a traceable form of certified sustainable palm oil in which sustainable palm oil and conventional palm oil are mixed for the purposes of manufacturing and transport but the original proportions are maintained. It is a stepping stone to segregated supply. BASF has also committed to sourcing only RSPO certified PKO by 2020 to combat issues linked to oil palm cultivation. BASF produces ingredients for cosmetics, detergents, cleaning agents and foodstuffs from mostly PKO and its derivatives, with a secondary focus on palm oil. In 2017, the firm purchased 153,000 tonnes of RSPO certified PKO, and was able to trace nearly 80% of its total palm oil consumption of more than 500,000 tonnes.

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13 OFI – MAY 2018 www.ofimagazine.com

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D IARY OF EVEN TS

23-25 MAY 2018 5 International Conference on Rice Bran Oil (ICRBO) 2018 VENUE: Hanoi, Vietnam CONTACT: International Association of Rice Bran Oil, Vietnam Tel: +84 913 708 003 E-mail: corporate@icrbo2018.org www.icrbo2018.org th

24-26 MAY 2018 Grain & Maritime Days in Odessa VENUE: Odessa, Ukraine CONTACT: APK-Inform Agency, Ukraine Tel: +38 048 703 7510 E-mail: conference@maritimedays.odessa.ua www.maritimedays.odessa.ua

3-5 JUNE 2018 11 World Surfactant Congress VENUE: Munich, Germany CONTACT: CESIO, Belgium Tel: +32 2 676 72 11 E-mail: info@cesio.eu www.cesio.eu/index.php/about-cesio/ cesio-congress th

3-8 JUNE 2018 22 International Symposium on Surfactants in Solution VENUE: Oklahoma Memorial Union, Norman USA CONTACT: Institute for Applied Surfactant Research, USA Tel: +1 405 325 5814 E-mail: bpgrady@ou.edu www.sis2018.ou.edu nd

4-6 JUNE 2018 2 International Symposium on Lipid Oxidation and Antioxidants VENUE: Karl-Franz University, Graz, Austria CONTACT: Euro Fed Lipid, Germany Tel: +49 69 79 17 533 E-mail: info@eurofedlipid.org www.eurofedlipid.org/meetings/graz2018 nd

19-20 JUNE 2018 IGC Grains Conference 2018 VENUE: Queen Elizabeth II Centre, London, UK CONTACT: International Grains Council, UK Tel: +44 20 7513 1122 E-mail: conf@igc.int www.igc.int/en/conference/confhome.aspx

20-23 JUNE 2018 EFPRA Congress 2018 VENUE: Fairmont Hotel, Barcelona, Spain CONTACT: EFPRA, Belgium Tel: +32 2 203 5141 E-mail: info@efpra.eu www.efpra.eu/congress-2018

22 JUNE 2018 Tropical Oils – Production, Applications, Nutritional and Health Aspects VENUE: Thagaste Monastery, Ghent, Belgium CONTACT: SCI, UK Tel: +44 20 7598 1561 E-mail: conferences@soci.org www.soci.org/Events/DisplayEvent?EventCode=OF524B

27 JUNE 2018 2nd International Sunflower Oil & Meal Trade Conference VENUE: Marriott Hotel Riverside, Shangai, China CONTACT: APK-Inform, Ukraine Tel: +380 562 320795 E-mail: info@apk-inform.com www.sunoil-conference.com

8-13 JULY 2018 2nd International Symposium on Plant Lipids VENUE: Osanbashi Hall, Yokohama, Japan CONTACT: Tokyo Institute of Technology, Japan Tel: +81 45 924 5527 E-mail: ispl2018-secretariat@lipid.bio.titech. ac.jp www.web.apollon.nta.co.jp/ispl2018

16-19 JULY 2018 BIO World Congress on Industrial Biotechnology VENUE: Pennsylvania Convention Center Philadelphia, USA CONTACT: BIO, USA Tel: +1 202 962 9200 E-mail: info@bio.org www.bio.org/events/bio-world-congress

4-6 SEPTEMBER 2018 AusCanola2018, 20th Australian Research Assembly on Brassicas VENUE: Perth, Australia CONTACT: Grain Industry Association of Western Australia Tel: +61 8 6262 2128 E-mail: RNash@giwa.org.au www.australianoilseeds.com/conferences_ workshops/ARAB/AusCanola_2018

4-6 SEPTEMBER 2018 US Soy Global Trade Exchange & Midwest Specialty Grains Conference and Trade Show 2018 VENUE: Sheraton Hotel, Kansas City, USA CONTACT: Midwest Shippers Association, USA Tel: +1 952 253 6231 E-mail: staff@mnshippers.com www.grainconference.org

For a full events list, go to: www.ofimagazine.com

5 SEPTEMBER 2018 Sunflower Oil Production, Quality and Applications VENUE: Balkan Congress Center, Edirne, Turkey CONTACT: International Sunflower Oils Association (ISOA), Italy Tel: +38 0676 3426 39 E-mail: info@isoa-sunoil.org www.isoa-sunoil.org/events/sunflower-oilproduction-quality-and-applications-1-1/aboutprogram

11-13 SEPTEMBER 2018 Global Grain South America 2018 VENUE: São Paulo, Brazil CONTACT: Global Grain, UK Tel: +44 20 7779 7222 E-mail: registration@ggrain.com www.globalgrainevents.com/south-america/ details.html

15-18 SEPTEMBER 2018 The International Exhibition of Edible Oil, Oilseeds, Related Products, Machineries & Related Industries VENUE: Tehran, Iran CONTACT: Nikatis, Iran Tel: +98 21 2265 7072 E-mail: info@Nikatis.ir www.seedex.nikatis.ir/en

15-16 SEPTEMBER 2018 20 Practical Short Course: Novel Technologies in Oilseed Processing, Edible Oil Refining and Oil Modification VENUE: Belfast, UK CONTACT: ID&A Ignace Debruyne & Associates VOF, Belgium Tel: +32 51 311 274 E-mail: RNash@giwa.org.au www.smartshortcourses.com th

16-19 SEPTEMBER 2018 16th Euro Fed Lipid Congress VENUE: Belfast Waterfront Congress Centre, Northern Ireland CONTACT: Euro Fed Lipid, Germany Tel: +49 69 79 17 533 E-mail: info@eurofedlipid.org www.eurofedlipid.org/meetings/belfast2018

18-20 SEPTEMBER 2018 4 Advanced Biofuels Conference VENUE: Conference Centre Wallenberg Gothenburg, Sweden CONTACT: Svebio, Sweden Tel: +46 8 441 7083 E-mail: tomas.ekbom@svebio.se www.svebio.se/en/events/ advanced-biofuels-conference th

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DI ARY O F E V E NT S

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19-20 SEPTEMBER 2018 5 International Palm Oil Sustainability Conference (IPOSC) 2018 VENUE: Shangri-La’s Tanjung Aru Resort & Spa Kota Kinabalu, Malaysia CONTACT: MPOC, Malaysia Tel: +60 603 7806 4097 www.mpoc.org.my/International_Palm_Oil_Sustainability_Conference_ (IPOSC)_2018.aspx th

19-20 SEPTEMBER 2018 7th ICIS European Surfactants Conference VENUE: Marriott Amsterdam, the Netherlands CONTACT: ICIS, UK Tel: +44 20 8652 4659; E-mail: events.registration@icis.com www.icisevents.com/europeansurfactants

3-4 OCTOBER 2018 Bulk Liquid Storage Conference 2018 VENUE: Cartagena, Spain CONTACT: Active Communications International, UK Tel: +48 61 646 7058; E-mail: mkielerska@acieu.net www.wplgroup.com/aci/event/european-bulk-liquid-storage

7-10 OCTOBER 2018 Vegetable Oil Processing and Products of Vegetable Oil/Biodiesel VENUE: Rudder Tower, Texas A&M University CONTACT: Mohammed S Alam, Texas A&M University, USA Tel: +1 979 845 2740; E-mail: msalam@tamu.edu www.perdc.tamu.edu/event/vegtetable-oil-processing-and-products-ofvegetable-oil-biodiesel

11-12 OCTOBER 2018 2nd ICIS Indian Surfactants Conference VENUE: Mumbai, India CONTACT: ICIS, UK Tel: +44 20 8652 2182; E-mail: kathryn.bloxham@icis.com www.icisevents.com/ehome/indiansurfactants

22-26 OCTOBER 2018 National Renderers Association 85th Annual Convention VENUE: Ritz-Carlton, Laguna Niguel, USA CONTACT: National Renderers Association, USA Tel: +1 703 683 0155; E-mail: co@martycovert.com www.nationalrenderers.org

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28-31 OCTOBER 2018 Fabric and Home Care World Conference VENUE: Boca Raton Resort & Club, Boca Raton, USA CONTACT: AOCS, USA Tel: +1 217 359 2344; E-mail: meetings@aocs.org www.fabrichomecare.aocs.org

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Engineers & Contractors Brussels • Belgium Tel.: +32 (0)2 634 25 00 Fax: +32 (0)2 634 25 25 info@dsengineers.com

Reliability through Experience

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RUSSIA

Clouds over Russian sun The Russian oils and fats industry has been struggling with multiple challenges, but the goverment believes the industry is heading for a breakthrough. Eugene Gerden writes

T

he Russian oils and fats industry is steadily developing, which is reflected by its high growth rates and the revival of investment projects, many of which were suspended during the country’s financial crisis, beginning in the second half of 2014. A fall in the price of crude oil, a major Russian export, and sanctions imposed following Russia’s annexation of Crimea and its military intervention in Ukraine led to a decline in the value of the ruble. In recent years, however, production of oils and fats in Russia has increased significantly. According to recent statements by the Russian Minister of Agriculture’s official spokesman Alexander Tkachev, the Russian oils and fats industry has already exceeded the majority of indicators outlined in the state strategy known as the ‘Development of Food and Processing Industry in Russia until 2020’. For example, the strategy says that by 2020, Russia should produce 7.5M tonnes of sunflower seed. However, production reached almost 11M tonnes in 2016. The same record figures are observed in the case of sunflower oil, for which production also set a historical record of 4.5M tonnes in 2017. Deputy Minister of Agriculture Sergey Levin

comments: “The oils and fats industry currently remains one of the fastest growing segments of the Russian food industry. During the period of 20132017, the volume of production grew by 130% and reached 5M tonnes. The production of sunflower oil during this period increased by 25%, soyabean oil grew almost two-fold and oil cake and meal grew by almost 50%.”

Short on sunflower A record harvest of sunflower and some other major industry crops also resulted in better utilisation of the industry’s processing capacities and in a partial solution to the raw material shortage at Russian oil extracting factories, which saw their feedstock supply fall from 40% in 2016 to 20-25% in 2017. Still, the shortage exists, which is mainly due to the ever growing demand for oils from Russia’s major processors. Nizhny Novgorod Oil and Fat Plant (NMZhK), one of Russia’s largest oils and fats processors, estimates a current shortage of raw materials in the Russian oils and fats industry at 5M tonnes and, according to predictions by its analysts, these figures may grow further due to the planned commissioning of new processing capacities within the industry this year. In recent months, several new largescale sunflower processing plants have been commissioned in Russia. The largest of them – which has the capacity to produce 300,000 tonnes/ year of vegetable oil – is located in Chernozemye in the Lipetsk region. A new Cargill plant in the Volgograd region with a capacity of 280,000 tonnes/year of oil will also process up to 640,000 tonnes/year of sunflower seeds.

According to data from the Russian Ministry of Agriculture, total current processing capacity for vegetable oils in Russia is in the range of 22-24M tonnes.

Give us duties In order to ensure stable operation of the industry, as well as regular supplies of raw materials for its needs, Russian oil processors have recently sent a petition to the Russian government, asking it to impose additional restrictions on the exports of sunflower seeds and other commodities out of the country. According to processors, there is a need to increase customs duties and deprive exporters of the right to refund value added tax (VAT). Without these measures, processors fear that the production of sunflower oil in Russia will decline by 22bn rubles (US$386.1M)/year. The same situation may extend to other vegetable oils and industry byproducts. According to Mikhail Maltsev, executive director of the Russian Union of Fat and Oil Producers (RUFOP), the current low profits of processors (and losses in some cases) are compensated by the production of downstream consumer goods, such as bottled oil, mayonnaise and sauces. Even with consumer goods, margins do not exceed 2%. In 2015-2017, fulfilling World Trade Organization (WTO) terms, Russia reduced duties on sunflower exports from 13.3% to 6.5%, which significantly increased exporters’ income and encouraged shipments outside the country, says Maltsev. According to Alexei Gavrilov, head of export development division of GK Efko, one of Russia’s leading oil processors, further growth of commodities exports, and in particular sunflower

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seeds, may lead to a 550,000 tonnes/year decrease in the production of sunflower oil in Russia and a 30% drop in its exports. In value terms, the market may fall by 22.3bn rubles (US$391.6M). This threatens to increase the losses of processors and might bankrupt some enterprises. Processors say the Russian oils and fats industry has been developing under favourable conditions since the beginning of the 2000s, when the sunflower export duty was 20%. According to analysts of the Russian Ministry of Agriculture, Russian processors are still in a better position than their competitors in most countries of the world, where exports of oilseeds are not restricted at all, while in Russia the duty is kept at 6.5%.

Problems with profitability

Jambulat Khatuov, Russia’s first Deputy Minister of Agriculture, says future production at the plant will supply not only the domestic market but also those abroad, particularly the Asia-Pacific region. This is part of the state plan to increase of the volume of the domestic soyabean processing industry. In the long term, the Russian government plans to create conditions for the establishment of olive oil production, which is not produced in Russia and is 100% imported from abroad. Last year sales of olive oil in the Russian market fell by 33%, compared to 2016, mainly due to an increase in olive oil prices. According to Mikhail Maltsev, annual olive oil consumption in Russia was about 30,000 tonnes before 2014, but in the last three years, this figure has dropped to 20,000 tonnes.

The Russian government hopes the planned expansion of production will contribute to the growth of exports of the industry’s end products abroad, particularly to new markets, including those in the Asia-Pacific region. Maltsev notes that the oils and fats complex has the greatest potential for increasing exports during the next few years compared to other segments of the Russian food industry. Maltsev believes the growth will take place despite the recent tightening of veterinary requirements for vegetable oils produced in Russia. In accordance with these requirements, starting from 1 January 2018, the content of trans fats in Russian-made oil and fat products cannot exceed 2%. Previously, the share of trans fat content could be a maximum of 20%. l Eugene Gerden is a freelance journalist

Still, despite the ongoing development of the Russian oil processing industry, the level of profitability currently remains relatively low, not exceeding 2%, says RUFOP. According to Maxim Basov, general director of Rusagro, one of Russia’s largest oils and fats producers and processors, this is mainly due to existing serious problems within the industry. Among them are the strengthening of the domestic currency, record exports of commodities abroad, as well as the reduction in state subsidies on shortterm loans. Processors need short-term loans for the purchase of raw materials. However, the current level of state subsidies for this is insufficient, Basov says. As a result, many processors refuse to take loans at a commercial rate of 15% to buy raw materials. Due to this, processors are also unable to make any reserves when purchasing raw materials, which negatively affects prices. Currently, sunflower oil remains a major export product and is the second largest crop in Russian agriculture. Last year, exports of sunflower oil from Russia was valued at US$1.54bn. In the case of soyabean oil, this figure amounted to US$450M in 2017.

State optimism The Russian government hopes the domestic oils and fats industry will continue its rapid growth in the coming years, despite existing problems. According to Russian Ministry of Agriculture forecasts, by 2021, the Russian market will reach 13M tonnes in volume terms. Vegetable oil and mayonnaise will account for the bulk of the volume. Director of the Department of Food and Processing Industry of the Russian Ministry of Industry and Trade, Evgeniy Akhpashev, says revenue in the oils and fats industry is growing faster than in the food industry as a whole. “From 2013, the growth was 93%, while the food industry showed revenue growth of 43% in this period,” says Akhpashev. In addition, the industry will continue to become more diversified. For example, at the end of last year, the first stage of the Amursky oil extraction plant was officially commissioned. The new facility specialises in the production of soyabean oil. Its annual capacities are estimated at 240,000 tonnes/year of soyabeans. Production capacities of the new factory are not disclosed. 17 OFI – MAY 2018 www.ofimagazine.com

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Crucial ingredient in hy Catalysts are an essential part of the hydrogenation process of vegetable oils as, without them, the necessary reactions would not be possible. Dr Paul Hudson of Johnson Matthey explores the basics of catalysts, including what catalysts are, why they are needed, how they work and what are the properties of the best catalysts for different applications

S

uccessful catalytic hydrogenation of edible oils began with the work of Wilhelm Norman in 1902. Catalytic hydrogenation was important in giving a new route to manufacture solid fats required for margarine production which, until Norman’s invention, were at risk of being in short supply. The invention meant a wider choice of raw materials was available to make margarine at the right consistency than just the animal fat that had been mostly used until that point. Though the invention of techniques for converting liquid oils into solids fats was significant, the ability to scale up hydrogenated fat production took time to catch up. Norman helped Joseph Crosfields develop a full-scale plant for the production of hydrogenated fats in Warrington, England, in 1907. In 1911, Norman was instrumental in the commissioning of the Oelwerke Germania fat hardening plant at Emmerich, Germany, where nickel hydrogenation catalysts continue to be manufactured to this day. Early catalysts were variable, having poor activity/selectivity, and – in combination with lowquality hydrogen – poorly pre-refined oils and the use of relatively simple plant equipment meant the process was far from optimised, with reactions taking a long time and leading to variable products. Nickel was used as the catalyst of choice even from the early days of oil hydrogenation. It remains the metal of choice for most edible oil hydrogenation reactions due to it being cost-effective and versatile, working across a wide range of feeds.

The what and why of catalysts A catalyst is a substance that accelerates a chemical reaction but is not consumed in the reaction and does not affect its equilibrium. A catalyst effectively reduces the energy barrier to a reaction, which allows the reaction to take place. Without a catalyst,

the reaction may be very slow or not possible at all (see Figure 1, page 20). Catalysts used for edible oil hydrogenation are processing aids and not food ingredients, which means they are used in the processing of foodstuffs but are entirely removed from the products in postprocessing. In the case of edible oil hydrogenation, it may appear that the catalyst is consumed during the reaction as reuse of the catalyst is only possible to a limited extent. Although hydrogenation catalysts require regular replacement, they are not technically consumed. Rather, they are deactivated and hence need replacing. Hydrogenation of fatty acids in triglyceride feeds can be performed for edible oil applications where hydrogenated fats are required or for technical applications where hydrogenated fatty acids are the product. Hydrogenation of edible oils is done to improve the oxidative and flavour stability or melting behaviour of oils. High levels of unsaturation in oils lead to a large number of double bonds in the triglycerides, which decreases the oxidative and flavour stability for the oil. The amount of unsaturation is characterised by the iodine value (IV) of the oil, with higher IV indicating more unsaturation, or more double bonds present. By hydrogenating the oils to reduce the number of double bonds (increase saturation/decrease IV), the shelf life and flavour stability of the oil can be greatly increased, which improves both the sustainability of edible oils, by reducing waste, and the profitability for oil producers and vendors. The amount of or type of unsaturation present in oils also influences the melting behaviour of the oil. Increased unsaturation means a lower melting point, so when an oil is hydrogenated – which decreases the amount of unsaturation – the melting point of the oil increases. Through catalyst selection and process

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hydrogenation process optimisation, it is possible to produce oils and fats with increased melting points or potentially more demanding melting profiles. Hydrogenation of oils generates fats used in a wider variety of products than would be possible with an unmodified oil feedstock, such as high melting point frying/bakery fats and steep melting curve confectionery fats through to salad oils that do not have solids present at room temperature but do have improved oxidative stability.

What makes a good catalyst? A catalyst is formulated to optimise effectiveness in particular applications. A nickel hydrogenation catalyst for triglycerides/fatty acids is essentially made up of three parts: active nickel, support and the encapsulating fat. It is the nickel surface area that is responsible for the activity of the catalyst and catalyses the reaction between hydrogen and the double bond in fatty acids. The support is present to allow a high dispersion of the nickel so that more activity can be obtained using effectively lower levels of nickel. Modern hydrogenation catalysts are usually supplied pre-reduced and encapsulated in a hardened fat. The pre-reduction of the catalysts means an easy start-up of the hydrogenation process, which increases efficiency and reduces cost for the user by eliminating a lengthy reduction step. The encapsulating fat protects the reduced nickel metal from air, which makes the handling of the catalysts safe and easy. Hydrogenation of oils is a three-phase reaction, where hydrogen gas is mixed into the liquid oil with the solid catalyst also dispersed through the mix. The hydrogenation reaction takes place when the hydrogen and a triglyceride adsorb onto the nickel located on the catalyst surface. Without the presence of the catalyst, no reaction

would take place. Various parameters govern the effectiveness of the hydrogenation reaction, including the oil feedstock, the catalyst and process parameters. Many properties can be used to describe a catalyst: Activity The primary function of the catalyst is to allow the reaction between hydrogen and the double bonds in the oil to take place. The activity of a catalyst describes how effectively a catalyst will drive a reaction, all else being equal. A more active catalyst will mean faster reactions, whereby the IV drop is more rapid. However, the maximum activity of a catalyst might only be realised if the reaction feedstock is sufficiently ‘clean’ and the process used is sufficiently optimised. Nickel loading and surface area The nickel content of a catalyst is easily quantifiable and tells the user what proportion of a catalyst is nickel metal. In the past, higher nickel content may have meant a higher performance hydrogenation catalyst. However, with improved formulations and better manufacturing of catalysts, it is not just the amount of nickel in a catalyst but how the nickel is present in a catalyst that determines how active the catalyst will be. For the same amount of nickel in a catalyst, a higher dispersion of the nickel leads to smaller nickel crystallites on the catalyst surface and a higher overall ‘nickel surface area’ for the same amount of metal (see Figure 2, page 20). Increased nickel surface area means it is possible to squeeze extra performance per mass of nickel. This is to be balanced with the ability of a catalyst to resist deactivation. More highly dispersed nickel may be more highly active to begin with, but may be more sensitive to deactivation, for example by water.

Polyene selectivity Catalysts are described by selectivity of two types. The first is polyene selectivity which is the ability of a catalyst to effectively hydrogenate fatty acids sequentially so that the hydrogenated product has a more desirable fatty acid profile (see Figure 3, page 22). A highly polyene selective catalyst will preferentially hydrogenate the most unsaturated fatty acids first, such as linolenic acid (C18:3), which increases the proportion of linoleic acid. Afterwards, the linoleic acids (C18:2) will preferentially be hydrogenated to oleic acid (C18:1). Finally the oleic acid is hydrogenated to saturated stearic acid (C18:0). A polyene selective catalyst is useful for increasing oxidative stability of an oil by removing the linolenic acid while producing minimal saturated fat, for example. Trans selectivity Trans selectivity describes how effectively hydrogenation of oils takes place without producing the trans configuration of double bonds in the product. Minimising trans formation during hydrogenation is largely a question of process optimisation. Trans fats form when the catalyst surface enters a state of being hydrogen-starved. When insufficient hydrogen is available at the surface of a catalyst, double bonds that adsorb onto the catalyst surface may not be hydrogenated. In this case, the molecule may desorb and diffuse back into the bulk oil unchanged. Otherwise, the double bond in the molecule may isomerise to a trans configuration before desorption. This is how trans fats are formed. To reduce the proportion of trans fats that are produced, it is important to maintain saturation of the catalyst surface with hydrogen.

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SOURCE: JOHNSON MATTHEY

C ATALYSTS

FIGURE 1: OPERATIONAL PRINCIPLE OF CATALYSTS

SOURCE: JOHNSON MATTHEY

For a reaction to take place, an amount of energy is required, which is referred to as the activation energy (Ea). The activation energy for the reaction with a catalyst is lower than without a catalyst

FIGURE 2: THE PRINCIPLE OF NICKEL DISPERSION

1) A cube with nominal 10cm edge length, giving it a volume of 1,000cm3 and a surface area of 600cm2 2) The cube is sliced in half along each axis to create eight smaller cubes with 5cm edge lengths. The amount of material still has a volume of 1,000cm3 but the total surface area increases to 1,200cm2 3) Each of these cubes is again cut in half on each axis, which reduces edge length to 2.5cm and total surface area to 2,400cm2, while still keeping volume the same The nickel can be imagined as the cube with its surface area increasing by dividing and dispersing the metal more finely u

Resistance to deactivation Some substances act to reduce catalytic activity. Examples in edible oils are sulphur- or phosphorouscontaining materials. A high level of such materials in a hydrogenation feed (due to lower quality/’dirty’ feed being used) will increase the time required for the hydrogenation to take place – if it is possible to attain target specifications at all – or the amount of catalyst required for the hydrogenation reaction. Increased catalyst loading is required due to the catalyst effectively cleaning the oil by absorbing the substance which acts to deactivate it. Excess catalyst over and above that required to clean the oil retains catalytic activity and performs the hydrogenation reaction.

Differentiation of catalysts Nickel hydrogenation catalysts are not all alike. Extensive R&D efforts mean catalysts are researched and formulated for specific applications and to make specific products from particular feedstocks. For example, catalysts for hydrogenating triglyceride

feeds will not be suitable for hydrogenating fatty acid feeds. Highly technical modern catalysts are formulated to have higher activity per amount of metal, although higher metal loading does not guarantee a better catalyst. Differentiation between catalysts for the same application comes from the effectiveness of the catalysts in consistently achieving the desired product in the desired time in a costeffective manner overall. The catalyst is likely the most expensive material in the production of hydrogenated fats and, with modern manufacturing practices, a high quality catalyst should behave as expected time and time again. Hydrogenation is possible with a wide range of feeds – from highly unsaturated soyabean through to more highly saturated oils such as palm oil. The same catalysts may be used across the range of feeds but the feedstock itself can introduce variability in terms of the outcome of the reactions. Oil feeds from different plants have varying fatty acid profiles, levels of free fatty acids and levels of deactivating substances in their makeup. These can

even vary for oil from the same plant depending on how the plant was grown and the level of refining of the oil. Palm oil is an example of an oil with a greater proportion of saturated fat than other plant-based oils. This is compared to soyabean oil, which can have relatively high levels of linolenic fatty acid. Soyabean oil is usually considered an example of a ‘clean’ oil, usually having relatively low levels of substances that inhibit catalyst activity, such as sulphur and phosphorous, whereas canola oil is relatively ‘dirty’, having higher levels of deactivating materials. Effective refining of oil prior to hydrogenation not only means a higher quality final product but also protection for the hydrogenation catalyst from deactivation during the process. Variability in the composition and level of contaminants in an oil mean hydrogenation of oils can, at times, give surprising changeability in the apparent effectiveness of a catalyst even when using high quality catalysts and in a well-controlled process.

Hydrogenation process parameters Hydrogen has low solubility in feed oils, so working with high hydrogen pressure in a reactor increases the amount of hydrogen available to react with the oil at the catalyst surface. If the amount of hydrogen is low, the reaction rate will be low and increased trans fat will be formed, which may be undesirable. Conversely, if high hydrogen pressure is used, the reaction will be shorter/faster and less trans fat will be formed. The tradeoff is that polyene selectivity of the reaction is reduced under higher pressure, meaning more saturated fat will likely be produced, which again may be undesirable. A high temperature reaction will increase the hydrogenation reaction rate, leading to shorter reaction times to hit the target IV. However, increased temperature will also decrease hydrogen solubility in the oil, meaning less will be available for reaction at the catalyst surface, which in turn means the proportion of trans fat produced during the reaction will likely increase. Mixing is an occasionally overlooked aspect of the hydrogenation reaction but it is critical in ensuring that the mixing of the solid/liquid/gas is effective enough to maximise the efficiency of the hydrogenation reaction. Good mixing means hydrogen is optimally available at the catalyst surface and the reaction can proceed with maximum efficiency. If mixing is poor, the catalyst surface can become hydrogenstarved, which will reduce the reaction rate and lead to increased trans fat formation.

Limitations and expectations Modern plant equipment allows detailed monitoring, control and accurate metering of raw materials, which means product IV is straightforwardly targeted for a hydrogenation reaction. The volume of hydrogen consumed in a reaction can be monitored and the volume of hydrogen required to achieve a specified IV is easily calculated prior to reaction. Therefore, when that known volume of hydrogen is consumed, the reaction is stopped knowing the IV target has been achieved. The IV of the product is closely related to the melting point of the fat, which, in turn, can be better characterised by a solid fat content (SFC)

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SOURCE: JOHNSON MATTHEY

C ATALYSTS

FIGURE 3: SELECTIVITY AMONG REACTIONS

Linoleic acid (C18:2) is the unsaturated fatty acid in the feed to be converted to oleic acid (C18:1) without hydrogenating further to stearic acid (C18:0). C18:2’ and C18:1’ represent linoleic and oleic fatty acids with trans configured double bonds. A reaction demonstrating high polyene selectivity would mean more C18:1 would be produced with less C18:0. Good selectivity against trans formation would mean less C18:2’ and C18:1’

u

measurement. Targeting a low IV for complete hydrogenation is straightforward and the reaction simply continues until the IV is achieved according to the hydrogen consumption. Targeting an intermediate IV is likely to be required for improving oxidative stability or specific melting behaviour. Using slip melting point as a target is again straightforward, as the hydrogenation can be adjusted through iterative testing to achieve the required melting point. Achieving more complex product properties, like solid fat content at varying temperatures, is a highly demanding application that may be difficult or impossible to achieve with hydrogenation alone. Some amount of product formulation or compromise on product properties may be required, as well as the hydrogenation of the feed.

Types of hydrogenation catalysts

PHOTO: JOHNSON MATTHEY

There are multiple ways hydrogenation catalysts can be employed depending on the application of the hydrogenated fat. Full or dead-end hydrogenation

involves the removal of effectively all double bonds from an oil feedstock by a highly active catalyst. Full hydrogenation is used where maximum oxidative stability or fully hardened fats with high melting points are required, such as for use as frying fats, for further formulation into products such as margarine, or in non-food applications such as naturally-derived candles. In modern times, fully hydrogenated fats are also used as interesterification feedstock. Partial hydrogenation refers to hydrogenation where the target is removal of some of the double bonds in the feed oil. An example of partial hydrogenation would be preferential conversion of linolenic fatty acid groups in a feed to linoleic/ oleic fatty acids whilst producing as little stearic (fully saturated) fatty acid as possible. Partial hydrogenation improves the properties of oils but has the downside that it produces trans fats. In some applications, such as cocoa butter substitutes/replacements (CBS/CBR), the steep melting profile of trans fat is the only way to achieve desired product properties. CBR/CBS require steep melting curve fats to

ensure the fats in confectionery goods remain solid at room temperature for transport and storage, but melt completely when being consumed as they would otherwise diminish the pleasant mouthfeel and sensory experience consumers enjoy. Hydrogenation of oil using sulphided nickel catalysts allows fats to be produced with preferential trans fat production, which can then be further formulated into products. Fatty acid hydrogenation can be performed before or after splitting the triglyceride into fatty acids and glycerol. Fatty acids are also hydrogenated to increase oxidative stability and alter melting behaviour, but the catalysts used are different to those used for triglyceride feeds. Hydrogenation of fatty acid feeds and feeds high in free fatty acids (FFAs) can lead to nickel soap formation during the reaction. Soap formation not only reduces catalyst activity, but the hydrogenated products may also require more post-reaction clean up to remove nickel soaps formed by the FFAs. Vacuum distillation or neutralisation of oils prior to hydrogenation will help reduce FFAs and protect the catalysts and product from the problems of nickel soap formation. Use of specialist catalysts resistant to soap formation will give superior results versus more conventional nickel catalysts and will lead to more effective hydrogenation of the feed. Hydrogenation of triglycerides and fatty acids is a complex reaction, but it is better understood now more than ever. Advanced catalyst formulations and process design/control mean reactions can be optimised to high efficiency, giving predictable results and consistent products in a cost-effective manner. With an increasing world population and a drive for sustainable use of resources, hydrogenation of oils and fatty acids will continue to be required to support the global need for oils and fats in foodstuffs as well as naturally derived ingredients for consumer products like detergents and cosmetics.  l Dr Paul Hudson is technical manager for edible oils and oleochemicals at Johnson Matthey, which supplies the PRICAT™ range of catalysts

JOHNSON MATTHEY’S CATALYST MANUFACTURING FACILITY IN EMMERICH, GERMANY

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E

nzymes can be viewed as nature’s catalysts, speeding up vital biological processes as well as chemical reactions. Novozymes, which has a 48% market share of the global enzymes market, is turning its focus on Malaysia, Indonesia and the palm oil market, with an enzyme that it says will improve oil extraction rates (OERs). “From cosmetics and biscuits, to soaps and fuels, palm oil is part of our everyday life,” the company says. “As demand rises, so does the need to use resources more efficiently.” Palm and palm kernel oils comprise one-third of global oil production (see Figure 1, below) and palm is, by far, the most efficient oil crop, outmatching all others in terms of average yield per hectare (see Figure 2, below), Novozymes says. “Yet palm oil milling concepts have not changed significantly since the 1950s and OER performance has stagnated in the 20-22% range for many years.” The company is now trialling its Palmora enzyme at several mills in Malaysia and Indonesia and says that full-scale plant operations are recording OER increases of at least 0.5 percentage points, accompanied by a reduction in effluent loads.

Boosting palm oil extraction rates PHOTO: ADOBE STOCK

Enzymes are nature’s catalysts and global enzymes leader Novozymes is targeting the palm oil market with a new product it believes will help increase oil extraction yields for low capital investment. Serena Lim writes

How it works “Our enzyme-assisted oil extraction process is a game-changing technology that benefits both old and new palm oil mills and addresses the challenges the industry faces today,” says Hong Wai Onn, technical service manager, oils and fats, Southeast Asia, for Novozymes Malaysia. Speaking at the International Palm Oil Congress and Exhibition (PIPOC) in November 2017, Hong said that Palmora:

Water and Palmora are applied to the palm fruit  Reduces viscosity, thereby enabling better oil Palm oil accounts for one-third before maceration, through a novel applicator separation of the world system, to the mass passing digester. Reduces hot dilution water, less world Palmoils oil accounts for one-third ofmeaning the The enzyme softens and breaks down the effluent. vegetable hemicellulose matrixes in the oil-bearing cell walls

vegetable oils

Describing the Novozymes process, Hong said that of the palm fruit mesocarp, enabling easier oil fresh fruit bunches (FFBs) are sterilised durinig release. increases cellefficient wall ruptureoil during digestion palm oil milling and then stripped (see Figure Overview of current vegetable oil production Palm is 3,by farIt the most crop screw pressing, resulting in less oil oil in the press page).  Increases OERs Overview of current vegetable oilfollowing production Palmand is by far the most efficient crop

Global production of palm oil and palm kernel oil comprises of Palm outmatches all other oil crops when it comes to efficiency per Global production of palm oil and palm kernel oil comprises of Palm outmatches all other oil crops when it comes to efficiency per one-third of the global oil production in ’16/17 used land FIGURE 2: EFFICIENCY OF OIL CROPS (TONNE/HECTARE/YEAR) FIGURE 1: OVERVIEW OF CURRENT VEGETABLE OIL PRODUCTION one-third of the global oil production in ’16/17

61 (30.1%)

Global of oil (Mn T ’16/17) 61 production Global production of oil (Mn T ’16/17) 47 (23.3%)

27 (13.3%)

40 (20.0%)

Soy

Palm

Rape

Soy

Sun

>500% >500%

7 7 7 (3.3%) 3 (3.3%) 2 3 (3.3%) (1.5%) (1.5%) (1.2%)

Rape

Average Oil Yield Average Oil(ton/ha/year) Yield (ton/ha/year)

4.1

40 (20.0%)

27 (13.3%)

7 (3.3%)

Palm

4.1

(30.1%)

47 (23.3%)

used land

Sun

0.7

2 (1.2%)

Palm Coconut Olive

Palm Coconut Other kernelOlive kernel Source(s): FOASTAT 2016, Global Palm Oil Production 2016, Oil World, 2013

SOURCE: FAOSTAT 2016, GLOBAL PALM OIL PRODUCTION 2016, OIL WORLD, 2013 Source(s): FOASTAT 2016, Global Palm Oil Production 2016, Oil World, 2013

Other

Palm

Palm

Rape

0.7

Rape

0.5

Sun

0.5

Sun

0.4 Soy

0.4 Soy

SOURCE: NOVOZYMES

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Enzymatic palm oil extraction can maximize oil extraction rate (OER) during palm oil milling

FIGURE 3: ENZYMATIC PALM OIL EXTRACTION PROCESS

Palm Kernel Processing

Enzymes (Palmora)

Fresh Fruit Bunch

Sterilization

Macerator

Stripping

Digestion & Pressing

Clarification

Hot Water Dilution

Crude Palm Oil

Effluent Sludge recovery

 Water and Palmora are added through a novel applicator system to the mass passing digester at screw conveyor. ® are added through a novel applicator system to the mass passing digester •  Water and Palmora Recommended process conditions are 300-350ppm of Palmora, 2.5-3.0% water, at temperatures of 65-850C. (MPD) at screw conveyor

• 

SOURCE: NOVOZYMES, INTERNATIONAL PALM OIL CONGRESS AND EXHIBITION (PIPOC)®IN NOVEMBER 2017

Recommended process conditions: 300 – 350ppm Palmora , 2.5 – 3.0% water, up to 30 minutes enzyme reaction, temperature 65 - 85oC

fibre and less unbroken cells in the sludge waste. In addition, it reduces the viscosity of undiluted crude oil. These benefits enable early oil harvesting prior to downstream clarification. Hong says there is faster separation of the oil and water phases in the clarifier tank. The system also reduces palm oil mill effluent generation in the clarifier tank. In addition, there is also considerably less need for hot dilution water because of the lower viscosity in the undiluted crude palm oil, leading to significantly reduced water usage. “These improvements can be obtained for low capital investment and with significant improvement to the bottom line,” he says.

Equipment and costs While Novozymes believes there are clear advantages to introducing Palmora, plantation companies will still need to weigh up the costs of introducing the enzyme system, which is compatible with existing facilities and equipment after minor retrofits. There is the cost of the enzyme, at a rate of some 300-350 ppm, or around 0.33kg/tonne of FFB. A plug-and-play enzyme applicator is needed to apply Palmora to the palm fruit. In addition, a macerator is needed to give the enzymes the right conditions, although some mills may already have one installed. “The capital cost will depend on the mill layout and footprint but, by combining all the benefits of the system, there is the potential to downsize downstream equipment, such as a smaller capacity decanter, leading to a smaller footprint,” according to Hong. On top of this, Novozymes offers technical service and training along with the enzymes in the form of onsite specialists to support their customers. Novozymes says that its solution has already been proven full-scale on a continuous basis. “We continue to supply current partners and the expectations are that more and more oil millers will soon embrace this opportunity to continue to increase extraction rates and improve their bottom lines significantly.” l

What are enzymes?

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ife would not exist without enzymes, but what exactly are they? Simply put, enzymes are proteins that act as catalysts. When one substance needs to be transformed into another, nature uses enzymes to speed up the process. In our stomachs for example, enzymes break down food into tiny particles to be converted into energy. Enzymes are present in all living cells. They are highly specific, allowing specific reactions and acting on specific substrates. They are fully biodegradable, breaking down into harmless amino acids. And they are nature’s tools, speeding up vital biological processes. Many industries use naturally-occurring enzymes as catalysts to speed up chemical reactions to produce a variety of everyday products, such as vegetable oils, cheese, beer, bread and ethanol. Advances in science, including biotechnology, have also enabled the production of improved enzymes. Specific genes that tell a microorganism to produce a specific enzyme can be isolated, modified and improved. This gene can be transferred to a production microorganism – selectively bred by industry – that produces large quantities of the enzyme. Once fermentation is complete, the desired enzymes are recovered from the fermentation broth and the microorganisms are inactivated. This process has enabled the development of enzymes which are more effective at the desired temperatures, pH or under manufacturing conditions that would inhibit enzyme activity (such as harsh chemicals), making them more efficient for home and industrial applications. These applications include: Detergents Enzymes have been used in many kinds of detergents for over 30 years to help remove stains. Most modern detergents contain a mix of several different enzymes, such as proteases (removes protein stains), amylases (removes starch stains), pectate lyases (removes fruit stains), mannanases (removes mannans, which are used as a thickening agent in cosmetics, toothpaste and in many processed foods such as dressings and ice creams), lipases (removes fats) and cellulases (clears colours and removes pills and fuzz on the fabric). These provide a sustainable and effective alternative to chemical ingredients, which enables consumers to wash their clothes at much lower temperatures and reduces water consumption. Foods and beverages Humans have been using enzymes for centuries to produce foods without really knowing it. For instance, it was our Bronze Age ancestors who discovered that an enzyme found in cows’ stomachs could turn milk into cheese. Later, enzymes from yeasts and bacteria also made it possible to produce wine, beer and vinegar. Nowadays, it is possible to isolate the specific enzymes responsible for these processes, allowing for specialised strains that improve the flavour, quality and consistency of each product. Other enzymes reduce the length of time required for aging, help clarify or stabilise products, or help control alcohol and sugar content.

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C ATALYSTS

Textiles Enzymes are widely used to prepare the fabrics for clothing, furniture and other household items. Increasing demands to reduce pollution caused by the textile industry has fuelled advances that have replaced harsh chemicals with enzymes in nearly all textile manufacturing. Enzymes are used to enhance the preparation of cotton for weaving, reduce impurities, or as a pretreatment before dying to reduce rinsing time and improve colour quality. Oils and fats In edible oils and fats, enzymes are already used in various applications.

the intact phospholipids in the gum, which represents a yield loss. Water degumming can be costly to producers and also uses high amounts of water, energy and raw materials. In enzymatic degumming, phospholipases are used to break the phospholipids into water-soluble and oil-soluble fragments, disrupting emulsion formation and releasing entrained oil, making degumming easier. Gums are converted into water-soluble lysolecithin, which is removed after a onestep centrifugation stage. Benefits include higher yields, reduced chemical use and reduced formation of gums, which are virtually oil free.

Enzymatic degumming is a well-established industrial process in vegetable oil refining. During refining, each step to separate oil from impurities – such as phospholipids – results in a loss of yield. In traditional refining, phospholipid removal is achieved by adding water to the crude oil, hydrating the phospholipids and causing an emulsion to form. The water and phospholipid will create a gum phase wherein a certain amount of oil will be trapped. This viscous gum is then separated from the bulk oil by centrifugation, in a process termed ‘water degumming’. Following centrifugation, neutral oil is entrained within

Interesterification modifies the physical properties of oils by rearranging the fatty acid groups within and between different triglycerides. It is used, for example, to modify the overall melting profile of oils and to improve the compatibility of oils in the solid state, with applications in margarine and confectionery fat production. Both chemical or enzymatic catalysts can be used in interestification. Enzymatic interesterification offers selectivity, mild reaction conditions, low temperatures, uses ‘natural’ lipase catalysts, with no need to wash or bleach resulting fats.

PRICAT catalysts, the clear choice

Biofuels Bioethanol can be produced from starchy plants such as corn and wheat, with enzymes efficiently making the conversion. One of the greatest breakthoughs in enzyme technology for biofuels has come in the area of cellulosic ethanol, in which low-cost, non-food feedstocks such as corn stover, woody residues and municipal solid waste can be used. This kind of biomass has a more complex structure and is more difficult to convert into ethanol. Enzymes are vital in this conversion. Biodiesel can also be produced enzymatically, without the need for harsh chemicals like sodium methoxide and sulphuric acid, even for biodiesel feedstocks with high free fatty acid (FFA) content, such as palm fatty acid distillate. In fact, the higher the FFA content, the better for the enzymes, meaning that enzymatic producers can benefit from greater feedstock flexibility, higher yields and increased safety, on top of being able to utilise and increase the value of low value feedstock such as palm fatty acid distillate and palm acid oil, among others. In addition, the process has fewer processing steps, produces higher quality glycerine by-product, uses less energy and generates less waste water. l

Johnson Matthey offers the PRICATTM range of catalysts for full or selective hydrogenation of fats and oils. With superior activity, consistency and selectivity, PRICAT catalysts are the clear choice for use in edible oil and oleochemical production processes.

To find out more visit www.matthey.com

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VALUE AD DITION

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ast July, construction began at the world’s first plant producing biobased dodecanedioic acid (DDDA), a component of many consumer products currently made from petroleum. The VerdePalm plant, which is due to be completed in the second half of this year, will transform low-value byproducts of palm oil processing into high-value green products. “The starting yeast for our production process will be made from the spent biomass that results from palm oil processing,” says Chad Waite, chairman of the Verdezyne board of directors. “Crude palm oil and palm byproducts, as well as other plant-based raw materials, will be used to produce approximately 6,000 tonnes of industrial grade DDDA each year.” The company behind the plant is US biotech company Verdezyne Inc, which was formed in 2008 to develop renewable fuels and chemicals. It is backed by investors such as Malaysian plantation conglomerate Sime Darby, British multinational oil and gas firm BP and Dutch life science firm DSM. “We use fatty acid feedstocks – soap stocks, distillates, and fatty acids – in a process that can compete on performance and cost against petroleum,” said Thomas Beardslee, vice president of R&D at Verdezyne. “Our yeast platform can produce chemicals in fewer steps, with lower volumes, to reach economies of scale with a simplified supply chain (see Figures 1 and 2, below). “It also reduces greenhouse gas emissions compared to the traditional petrochemical route.” The starting point of Verdezyne’s process is its own proprietary yeast, which it uses in a fermentation process to produce chemicals from a variety of non-food feedstocks. “Feedstock flexibility allows us to use materials that are not only renewable but do not compete with food or fuel applications, which is the case with sugar and vegetable oils.

Yeast transforms palm byproducts A US synthetic biology company is building the world’s first biobased dodecanedioic acid plant in Malaysia, which will utilise the byproducts of palm oil processing to produce renewable chemicals. Serena Lim writes “Our ability to use multiple feedstocks makes us less vulnerable to the effects of price and supply volatility, which is the case with technologies that rely solely on sugar or petroleum feedstocks.” Verdezyne has focused on three chemical intermediates – dodecanedioic acid, sebacic acid and adipic acid – the base materials to produce polyurethanes, plasticisers, coatings, nylons, resins and lubricants. These intermediates are used in many everyday items (see Figure 4, following page). The VerdePalm plant at the Bio-XCell biotechnology and ecosystem park in Iskandar, Johor, southern Malaysia, will initially produce DDDA, a 12-carbon dicarboxylic acid. DDDA is a 40,000 tonnes/year global market used to produce speciality nylons requiring chemical, moisture and/or abrasion resistance.

It is used as a corrosion inhibitor in metalworking fluids and is the main building block of Verdezyne’s FerroShield product, which can be used in corrosion inhibitor applications including metalworking fluids, engine coolants, metal cleaners, die cast release agents and aqueous hydraulic fluids. The petroleum-based route to produce DDDA (butadiene trimerisation and nitric acid oxidation) consumes some 0.5 tonnes of nitric acid per tonne of DDDA and produces 0.2 tonnes of nitrous oxide per tonne of DDDA produced. The global warming potential of nitrous oxide is 298 times that of carbon dioxide. Verdezyne’s two-stage, aerobic fed-batch fermentation process converts lauric acid to DDDA by completely blocking beta oxidation and amplifying C12 specific omega oxidation.

FIGURE 1: PETROLEUM ROUTE TO PRODUCE CHEMICALS

FIGURE 2: VERDEZYNE ROUTE TO PRODUCE CHEMICALS

SOURCE: VERDEZYNE

SOURCE: VERDEZYNE

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VALU E ADD ITION

rce and Uses Providing Markets with Biobased Alternatives

SOURCE: VERDEZYNE

FIGURE 3: PETROLEUM PRODUCTS FROM ONE BARREL OF CRUDE OIL, 2016 (GALLONS)

FIGURE 4: MARKETS WITH BIO-BASED ALTERNATIVES Paints/Coatings Thermoplastic Polyurethane

Foams

Industrial

Elastic Parts Adhesives

Plasticizers

Resins

Polyamide N6,6, N6,10 N6,12, Others

Resins

Bio-Adipic acid

Automotive

Fibers Bio-Sebacic acid

Parts

Note: A US 42 gallon barrel of crude oil yields about 45 gallons of petroleum products because of refinery processing gain. The sum of the products may not equal 45 gallons because of independent rounding. SOURCE: US ENERGY ADMINISTRATION, PETROLEUM SUPPLY MONTHLY, FEBRUARY 2017, PRELIMINARY DATA FOR 2016

The path to scaling up to commercial production began in 2010 at lab scale, when Verdezyne developed the fermentation technology and proof of concept for DDDA and adipic acid. In 2011, Verdezyne opened the doors to its first pilot plant with 400 litres of fermentation capacity and, by 2012, it had created the world’s first renewable nylon fibre. The turning point for Verdezyne came in 2014, when it produced more than one tonne of DDDA, confirming the scalability of its process. By 2015, it was tolling over 30 tonnes of product for sampling, culminating in the groundbreaking ceremony of its commercial plant in Malaysia on 30 July 2017, which has 6,000 tonnes of capacity.

Films Mixed diacid

Biodegradable Plastics

Polyester Polyol

Ag Covering Films Packaging

Recreation

Spray Coatings Corrosion Inhibitors

Personal

MWF Lubricants

Petroleum Refining

Cutting Grinding Fluids

SOURCE: VERDEZYNE

(petrol)

Home

Films

Bio-Dodecanedioic acid

FIGURE 5: CRUDE OIL REFINING PROCESS

(petrol)

So why make a bio-based alternative to a petroleum product? According to Beardslee, the size of the petrochemical market is US$600bn. One 42 gallon barrel of crude oil yields about 45 gallons of Crude Oil petroleum products, namely 20 gallons of petrol, 11 gallons of ultra-low sulphur distillate, four gallons of jet fuel, two gallons of hydrocarbon gas liquids, FIGURE 6: CRACKING AND REFORMIING OF NAPHTHA INTO BUILDING BLOCKS one gallon of heavy fuel oil one gallon of heating oil and other products (see Figure 3, above). The PE six gallons of ‘other products’ are basically the building block chemicals that result in the global PVC petrochemical market. PP Ethylene Crude oil is refined into various fractions that are suitable as different grades of fuel such as Propylene PIB LPG, petrol, jet fuel, diesel fuel, and industrial fuel Butylene (see Figure 5, right). One fraction – naptha – is PAN converted into seven chemicals that are the main Butadiene Olefins PS building blocks of the petrochemical industry: ethylene, propylene, butylene, butadiene, benzene, ABS toulene and xylene (see Figure 6, right). It is their Naphtha downstream products that Verdezyne is targeting. Verdezyne is not the only company in this space. N6,6 Others include Amyris, Avantium, BioAmber, Benzene Genomatica, Gevo, NatureWorks, Rennovia and N6 Aromatics Toluene Reverdia. These companies are deploying new conversion technologies that are fermentation PU Xylene based or chemocatalytic, using multiple renewable PET feedstocks. “There will be new commercial scale assets u

Cracking and Reforming into Building Blocks

SOURCE: VERDEZYNE

A petroleum alternative

How can we turn this....

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VALU E ADD ITION

u

and new bio-based materials with improved performance, but this industry needs regulations and policies that even the playing field,” Beardslee says. Verdezyne’s DDDA from its Malaysian plant will support its exisiting FerroShield product. “Marketing of FerroShield was launched in February 2017,” said Verdezyne president and CEO William Radany. “The rust inhibition industry is in need of a high-performing dibasic acid mixture that can be easily incorporated into existing customer formulas. We foresee strong demand for FerroShield in a number of countries in Asia and Europe, as well as in the USA and Canada.” The company’s next commercial product will be carotenoids. These yellow, orange, or red-coloured pigments give many vegetables their colour. They have a wide application in the food and beverage, dietary supplement, personal care and animal feed

industries, mainly as colourants and antioxidants. Carotenoids are produced by many fruits and vegetables, as well as some bacteria, fungi, and algae. Many are found in the foods we eat including a variety of fruits and vegetables, although the primary sources of lycopene are tomato and tomato products. Additionally, egg yolk is a highly bioavailable source of lutein and zeaxanthin. Dietary carotenoids are thought to provide health benefits in decreasing the risk of disease, particularly certain cancers and eye disease. The carotenoids that have been most studied in this regard are beta carotene, lycopene, lutein and zeaxanthin. In part, the beneficial effects of carotenoids are thought to be due to their role as antioxidants. Beta carotene may have added benefits due its ability to be converted to vitamin A. Furthermore, lutein and zeaxanthin may be protective in eye disease because they absorb

Yeast and fermentation

V

erdezyne uses a manufacturing process – fermentation – which most of us are familiar with. Microbes that naturally produce chemicals have been domesticated for many years in fermentation processes to make food such as cheese and wine. Fermentation starts with an organism (in Verdezyne’s case, yeast) that has all the machinery in place to make a product. Synthetic biology tools such as DNA synthesis, DNA sequencing and genome editing have enabled the enhancement of microbes so that they can create biochemical pathways to produce chemicals by fermentation. Verdezyne has used synthetic biology to develop a yeast that can produce adipic acid and dodecanedioic acid (DDDA), its two commercial products. These two chemicals are used in many industrial applications but are best known in the manufacture of nylon. Recently, Verdezyne has also developed a yeast that can produce carotenoids by fermentation. “We have selected yeast as a host because it differs in many ways from other microorganisms, such as bacteria, that make it ideal as a robust host for large-scale commercial fermentation under industrial conditions,” the company says. “First of all, yeast is capable of fermentation in acidic conditions, which inhibits contamination by other microorganisms. Secondly, yeast is not vulnerable to infection by naturally-occurring viruses called bacteriophage that can infect and destroy bacterial fermentations.” Verdezyne’s chemicals for industrial applications are produced from plant oil-sourced feedstocks, while its personal care and nutraceutical products are based on renewable feedstocks. All are produced via its yeast fermentation as an alternative to the petrochemical route. Verdezyne’s industrial products Dodecanedioic acid (DDDA) is used in the production of highperformance nylon 6,12, molding resins, as well as adhesives and powder coatings. It is traditionally produced from butadiene via a multistep chemical process. FerroShield is a nitrate-free mixture of long-chain dibasic acids and provides optimal corrosion resistance when formulated as an amine salt. Sebacic acid is an intermediate used in the production of nylon 6,10, a plastic widely used in everyday household items like toothbrush bristles and fishing lines. It is also found in coatings, adhesives and resins. Sebacic acid is currently produced from castor oil. Adipic acid is a key component of nylon 6,6 and thermoplastic polyurethanes. Everyday products that contain adipic acid include clothing, footwear, furniture, carpets, automobile parts and nylon.

damaging blue light that enters the eye. “Carotenoids can be extracted from agricultural crops but are mainly produced by chemical synthesis from petroleum-based precursors, thereby making carotenoids by fermentation a more sustainable option,” Beardslee says. The company produces carotenoids via its yeast platform and says natural feedstocks and fermentation technology can accelerate carotenoid production. It has developed lycopene and beta carotene carotenoids at pilot scale, and zeaxanthin, canthaxanthin and astaxanthin at lab scale. For the moment, however, the main focus is the DDDA which will be produced in Malaysia. “The VerdePalm plant is part of our comprehensive strategy of expansion into Asia, and represents a major step toward our goal of replacing petroleum-derived chemicals with renewable dropin replacements,” concludes Radany. l

Adipic acid is currently produced from benzene, a petroleum fraction. Suberic acid is an intermediate used in drug synthesis and in the manufacturing of plastics. Personal care and nutraceutical products Carotenoids are a class of naturally occurring pigments defined as 40-carbon molecules that typically impart colour in the yellow to red spectrum. Lycopene is a 40-carbon molecule mainly found in tomatoes. It is also present in watermelon, apricot and pink guava. Lycopene and other carotenoids are bioactive molecules with health benefits resulting from their antioxidant properties. Commercial lycopene is produced through synthetic organic chemistry, harvested from microorganisms via fermentation, or extracted from fruits such as tomatoes. The lycopene content in tomatoes is in the range of 10-20mg/100g of fresh fruit, meaning it takes 100,000 tomatoes to produce 1kg of lycopene. Beta carotene is the most famous of the 40-carbon carotenoid molecules, with its name taken from carrots. However other natural sources high in beta-carotene are pumpkin, sweet potato, crude palm oil and spinach. It has antioxidant properties and is well known as a precursor to vitamin A, which is important in eye health. Most betacarotene is produced by chemical synthesis from petroleum-based precursors. Astaxanthin is another member of the carotenoid family and is responsible for the red colour of salmon meat and cooked shrimp. It is an antioxidant but its chemical structure prevents its metabolism into other vitamin forms, leading to its accumulation in the tissues of animals. It is naturally produced by yeast and algae for its antioxidant properties in response to exposure to intense sunlight. Commercially available astaxanthin is often harvested from these microorganisms after fermentation. However, the major production method is chemical synthesis from petroleum precursors. Canthaxanthin is a red-orange member of the carotenoid family and is used in animal feed to impart colour and for its antioxidant properties. It is also used as a dye for foods such as soup, salad dressing and tomato juice. Canthaxanthin is currently produced commercially by chemical synthesis from petroleum-based precursors. Lutein is a yellow-colored carotenoid molecule produced only in plants. It is an antioxidant and accumulates in the fat tissue of animals as well as in egg yolks. It also accumulates in the retina where it can contribute to eye health. Lutein is produced commercially from dried marigold flowers requiring large-scale cultivation, manual harvesting of flowers and a multi-step process for the drying, saponification and extraction of the free form of the molecule.

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The POC2018 conference, held in Malaysia on 5-7 March, painted a picture of an industry that has reached the point where it must change some of its long-held ways or risk the consequences. Ile Kauppila writes

Reaching a crossroads

T

he EU’s proposal to remove palm oilbased biodiesel from its list of renewable fuels from 2021 onwards was the topic that dominated discussion at the Palm and Lauric Oils Price Outlook Conference and Exhibition (POC2018). While not presented as an outright ban, it was the industry’s near unanimous view that the measure – if implemented – would amount to precisely that. Malaysia’s Minister of Plantation Industries and Commodities Datuk Seri Mah Siew Keong, a vocal opponent of the EU’s proposal, brought the matter up during the opening ceremony. He pointed out that, as the EU had emerged as a hotbed of palm oil trade, the measure would have a significant negative impact on Malaysia. “We view this ban as unfair and discriminatory,” the minister said, echoing his earlier statements. “I personally see most of the reasoning behind [the EU’s] anti-palm oil campaign as other vegetable oil producers being afraid of the growth of palm oil.” Fueling this fear, said Mah, was Malaysia’s palm oil production’s recovery from the dry conditions over the past couple of years, caused by El Niño. According to the minister, Malaysia’s palm oil output had grown from 17.3M tonnes in 2016 to 19.92M tonnes in 2017. In 2018, he expected the country to produce up to 20.5M tonnes of palm oil, which would, at current prices, have a market value of 78bn ringgit (US$20bn). The industry, however, was not overtly concerned with the possible phaseout of palm oil in the EU. In a panel discussion, Nagaraj Meda, founder, chair and managing director of Transgraph Consulting, said the biodiesel market in Europe was a doomed industry as electric cars were increasing their market share and that the EU had no other possible source of vegetable oil to feed its industry. “I don’t think the palm industry should worry about EU too much. Biodiesel there is a dying market,” he summarised.

How to reach sustainability? Related to the EU’s palm oil phaseout, sustainability was also mentioned regularly throughout the conference. Carl Bek-Nielsen, vice chair and chief executive of United Plantations Berhad, identified sustainability as one of the main challenges currently facing the industry. Driving global concerns about palm oil’s sustainability is the growing world population, which according to Bek-Nielsen is expected to grow from 7.6bn to 9.8bn between 2017 and 2050. Not only that, the population earning a middle class income is projected to go from 2bn to 5bn in the same time frame. However, Bek-Nielsen feels that while palm oil has undeniably caused deforestation, its effects

should be put into perspective and compared to other industries. Doing this reveals that out of the 113M ha deforested in the world between 1990 and 2008, 63M ha was for the production of beef, 13M ha for soyabean and 10M ha for pig and poultry production. Palm oil was only fourth on the list at 6M ha. Despite the relatively low contribution to deforestation when compared to beef, Bek-Nielsen said the palm industry could not continue doing business as usual and that things would have to change. He highlighted the problem of sustainability being “bolted on” to the industry, instead of being “built into” it. He advocated undertaking certifiable sustainable farming practices, among other solutions, but placed part of the blame for the industry’s unsustainable image on consumer goods companies. “Consumer goods companies are saying many things about sustainability, but they’re not acting on them. This undermines trust in the palm oil industry. They tout their commitment to sustainability but are not buying sustainable palm oil due to the higher price,” Bek-Nielsen said.

Palm losing its edge Moving on to market outlooks, several speakers forecast that 2018 could be a promising year, at least for some oil products. Arif Rachmat, CEO at Triputra Agro Persada, agreed with minister Mah, saying Malaysian palm oil production could grow 3% in 2018 to 20.5M tonnes, while Indonesian production could grow up to 8% to roughly 39M tonnes from 36.5M tonnes in 2017. Palm oil stocks in the two largest producing countries, however, were significantly lower from the industry’s average of 6-7M tonnes. Dorab

Mistry, director at consumer goods firm Godrej International, said that in June 2017, combined stocks in Malaysia and Indonesia totalled 4.9M tonnes and by July 2018, they could fall to 4.5M tonnes. Indonesian stocks were already tight. Thomas Mielke, executive director at Oil World, said palm oil prices had been under pressure since December 2017, but very strong demand had kept them above those seen in late 2015, when palm oil prices sank to approximately US$500/tonne. At the moment, according to Mielke, prices were hovering at about US$625/tonne and could rally some in the coming months. Palm oil was, however, losing its competitive edge against soya, sunflower and rapeseed. The other three crops had significantly increased their yields over the past 15 years, with soyabean yields growing by 18% on average, rapeseed yields by 26% and sunflower seed yields by a whopping 53% (see Figure 1, p30). At the same time, palm oil yields had stagnated and Mielke projected that the strong recovery seen in 2017 and 2018 would be temporary. From 2019 onwards, he expected palm oil production and supplies to fall. One of the issues driving the low yields was the rising age profile of oil palm trees stemming from a lack of replanting and the slowdown in new plantings due to several governments in Southeast Asia enacting laws prohibiting the establishment of new plantations. Additionally, Malaysia was struggling with an ongoing labour shortage at its plantations.

Drought impacting soyabeans But while palm may be struggling against other oilseeds, things were not problem-free for them either. Soya production in Argentina had taken

u

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CHART: DORAB MISTRY, GODREJ INTERNATIONAL

TABLE 1: INCREMENTAL GLOBAL OIL SUPPLY AND DEMAND (‘000 TONNES)

CHART: THOMAS MIELKE, ISTA MIELKE (OIL WORLD)

T R ADIN G & PRIC E FOREC ASTIN G

FIGURE 1: SOYA, RAPE, SUNFLOWER YIELDS, 1994-2018 (TONNES/HA)

2016-2017

2017-2018

+2,400

+2,000

-300

+500

Palm oil

+6,500

+3,500

Sunflower oil

+2,000

-500

Total supply

+12,000

+6,500

Total demand

+6,000

+6,000

Soya oil Rapeseed oil

for sustainable PKO, but CNO could be eating into the PKO market.

A surprise from India Just before POC 2018, the Indian government gave a nasty surprise to several of the presenters, forcing them to revise their predictions. In the beginning of March, the Indian government increased the import tax on palm oil to 44% for crude palm oil (CPO) and 54% for refined palm oil, plus a 10% surcharge. Mistry, who began his presentation by thanking India for completely ruining his original work, said the decision was a “panic reaction” due to the upcoming elections in two oilseed producing states in India. Mistry suspected the tax hike to be an attempt at keeping farmers happy and to win some extra votes for the current government. He suspected the duty would also go up for sunflower, soyabean and rapeseed to set a level playing field. “However, inflation may return to India and the government may decrease the duty again. It is my opinion that the government should step back and reduce the duty on CPO to 34% and keep olein as is. This would increase the price gap between the two and lead to a large jump in domestic refining,” Mistry said. Mielke projected that the Indian tax hike would affect sunflower and soya oil prices as Indian buyers switched to them to make up for the now more expensive palm oil. This change would drive sunflower and soya oil prices up, while simultaneously pushing palm oil prices down, which would make it more attractive to other countries and make up for the loss in the Indian market.

Emerging markets u

a dive due a continuing drought, with soyabean plantings at a nine-year low at 17.75M ha, said Mielke. Production in the country was likely to reach 42M tonnes this season, he said, unless more rain came in late March this year. Poor production in Argentina could affect the soyabean crop in the whole of South America, where the 2017/18 soya crop could fall by 16M tonnes from the 180M tonnes reached the year before. The lower Argentine crop could be partly compensated for by a good crop in Brazil, which Mielke expected to reach 109-113M tonnes. “There has been remarkable change in soya crush margins. They are through the roof. The crush in Argentina is down and the country’s meal supply is falling apart. As a result, meal is driving the market and the co-product soya oil is getting weak, temporarily. Global soya production is at around 339M tonnes, down from 348M tonnes last year. We have moved into a deficit,” Mielke said. As a result of the production deficit, soyabean imports were suffering. China was projected to take in less soyabean oil in the coming year due to a growing demand for soya meal. The falling demand for soya oil could translate into an increase in palm oil intake in China.

Stronger year for oleochemicals Oleochemicals were looking at a stronger year in 2018, Norman Ellard, president of IP Specialties Asia told the crowd. Global fatty acid capacity remained at 12M tonnes, well above the market

demand, but the market was catching up. Estimated capacity utilisation was at 85%. Fatty alcohols had a smaller comparative market that was focused on a few larger players. The glycerine market was growing strongly, driven primarily by biodiesel, but the fuel’s difficulties were catching up to the price. Demand would stay healthy, but glycerine availability was likely to stay tight, said Ellard. Synthetic alcohols remained the cost leader, but the global capacity had now been completely sold out and any new capacity would have to wait until 2019. Combined with the above facts, this should see natural oleochemicals take positive steps towards recovery. In raw materials, coconut oil (CNO) had regained its lustre and joined the lauric market in 2017 due to the big boom in its touted health benefits. However, Ellard believed this bubble to have now burst and CNO prices had slumped down again. However, according to K S Yoon, director of Trading Services London, coconut water and applications besides oil were keeping demand up. Total global CNO supply would grow from 2.42M tonnes in 2017 to 2.79M tonnes in 2018, with demand going from 2.43M tonnes to 2.69M tonnes. Palm kernel oil (PKO) supply was set to grow with increased palm oil production, said Yoon, rising from 6.65M tonnes in 2017 to 7.3M tonnes in 2018. There was likely to be oversupply in the market, however, as demand would grow only to 6.99M tonnes from 6.42M tonnes in 2017. Koon noted that there was an increasing demand

Two markets were brought up as ones to watch for future potential. Rasheed Janmohammed, CEO of investment group Westbury, said Pakistan’s edible oil imports had grown from 2.7M tonnes in 2016 to 3M tonnes in 2017, marking a 19% increase. The country’s total edible oil consumption was around 4.2M tonnes, while local production was only 400,000 tonnes, which had led Pakistan to embark on a large-scale oilseed purchase campaign. According to Janmohammed, Pakistan had traditionally been an important market for palm oil from Malaysia, but the export tax on Malaysian palm oil had led to Pakistan not importing CPO at the moment. Oil consumption was growing, however, which opened up plentiful potential for other edible oils. Similarly, Vito Martielli, director of grains and oilseeds at Rabobank, said population growth in Africa was fuelling an ever increasing demand for edible oils in Africa. West Africa was set to overtake northern Africa as the largest oil consuming market on the continent, while eastern countries were also exhibiting strong growth. All in all, by 2030, trade in vegetable oils in Africa should increase 33%, translating to, among others, a demand of 3.5M tonnes of additional palm oil every year until then (see report in upcoming OFI June 2018 issue). Local production, which was centred mostly in West Africa, would increase slightly but had no hopes of satisfying local demand, opening the door for foreign imports and investments to increase domestic production. The price advantage, however, would favour palm oil, concluded Martielli. l Ile Kauppila is the assistant editor at OFI

30 OFI – MAY 2018 www.ofimagazine.com

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MARGARIN E & SPREAD S

W

hen it is properly cultivated, palm oil is one of the most sustainable and functional vegetable oils. It uses far less land per tonne of product than, for example, lecithin-producing soyabean oil. Palm oil production, however, has been shown to have adverse effects on the environment and for local communities in some plantations, from massive deforestation to abusive working conditions. Wildlife, too, has been impacted by unsustainable plantation practices, with orangutan numbers now vastly reduced in Borneo, Indonesia. Correspondingly, consumers have become increasingly aware of palm oil as a potential liability in their shopping carts. The resulting pressure in countries such as France, Germany, Norway, Sweden and the UK, and has seen many margarine manufacturers looking for alternatives to palm oil. Today, viable alternatives have emerged in the marketplace, even for more challenging recipes.

Not so simple But going palm-free is not easy. Converting margarine recipes, for example, from using palmbased oils and palm-based emulsifiers to palm-free equivalents is not an overnight switch. Emulsifiers, to begin with, are a small part of the recipe but an extremely important one. If palm oil is removed as a raw material for emulsifiers, it needs to be replaced with something else. Essentially, producers need to lose the palmitic acids and replace them with stearic acids from rapeseed or soyabeans, for example. As a result, the melting point will increase and the hydrophilic and lipophilic balance should also be expected to change slightly. To achieve a palm-free product, other oils in the recipe may need to be replaced as well. As a result, manufacturers are likely to be left with an end-product that will be noticeably different to the palm-based version.

Going palm free Margarine manufacturers wanting to introduce palm-free products need to do much more than simply swap lipid ingredients. Solving the challenges takes a systematic approach to the entire process Two directions Palm-free margarines are not commonplace in today’s marketplace. Palsgaard sees two basic directions taken by margarine manufacturers and the industrial bakers it serves – they will either use Roundtable for Sustainable Palm Oil (RSPO) Segregated (SG) palm oil or go palm-free. Palsgaard’s entire range of emulsifiers, for example, is already in compliance with the RSPO SG model. However, for those customers not prepared to make the investment required by certified RSPO SG production, going the palm-free way might seem an easy alternative. In reality, and depending on the product, this may well be the more difficult of the two paths to take. Producers of pastry margarine for laminated doughs, for instance, will need palm-based ingredients to achieve the results that only high and controllable plasticity can deliver. To take the palm-free road, it is necessary to build up experience from scratch. Part of the journey requires the manufacturer to source new raw materials, establish new supplier relationships and learn as much as possible about the materials and exactly how they function. Fully hydrogenated oils should be avoided

wherever possible as their high melting point results in a brittle end-product. Then there is the price issue, with more exotic oils such as chestnut or mango offered at a significant premium.

Palm-free portfolio During the three years it took to develop Palsgaard’s new range of palm-free emulsifiers, the company’s R&D team and application specialists were able to amass considerable know-how. They experimented with many different oil types and examined the entire production process from re-mill temperatures to heating jackets and more. Making a palm-free margarine emulsifier involves more than simply ensuring the oil used is palm-free. Other things to consider include the glycerol component and the antioxidant system. Palsgaard installed special glycerol tanks for producing palm-free glycerol, before putting in the effort to ensure all the antioxidants were free of palm oil as well. Emulsifiers for puff pastry margarine were next to be developed, using combinations of monoglycerides and polyglycerol, and citric acid esters were replaced with palmfree alternatives. The firm also made polyglycerol monosterate (PGMS) in a palm-free version.

32 OFI – MAY 2018 www.ofimagazine.com

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MARGARIN E & SPREAD S

Developing palm-free emulsifier systems for liquid margarines was also high on Palsgaard’s wishlist. This is a growth area, spurred by new coronary research urging consumers and the industry to cut back on solid and saturated fats. During the process, the company noted the effects of changing melting points and equipment temperatures, discovering, for example, how important it is to carefully control temperature parameters from end to end when dealing with oils that have a higher melting point. This is particularly important if it is necessary to stop the machinery for packaging or similar production steps. The higher melting point of some nut oils, for example, sets off a potential avalanche of issues that starts at the heating jacket and does not stop until it has touched every point along the production line. In bakery margarines, the results are dependent on the ratios of palm-free fat types. Palsgaard spent a lot of time changing these ratios and playing with different process parameters until each solution functioned as intended. A key lesson was that some of the fats became easily overworked and did not give the stability the company had expected. There are certainly many differences to be aware of. For example, palm-free emulsifiers do not provide the same variation in fatty acids. Longer, non-palmitic fatty acid chains make for more fatfriendly emulsifiers – something that becomes very noticeable at melting point.

Responsible and sustainable The process of developing Palsgaard’s new emulsifier

The effects of removing palm oil from margarine n Higher melting points n Higher emulsion temperatures needed n Higher temperaturs on heating jackets needed n Change in crystallisation speed n Change in process parametres needed n Tendency to create more brittle margarines n Post-crystallisation or overworked margarine n More lipophilic emulsifiers with higher melting points needed range was not particularly difficult, but it was a long and systematic, trial-by-trial journey that simply took time to complete. A particular challenge for the firm was the effort it took to obtain the range of raw materials it wanted to test and then working with them to understand how each material differs from palm oil. Responsible sourcing was a necessary part of this process. Reflecting the procurement process Palsgaard’s customers need to go through, the purchasing of raw materials was not purely about

the technical aspects, but needed to be sufficiently sustainable as well. To ensure it could live up to the culture of sustainability, the firm worked closely with existing, trusted suppliers wherever possible. With Palsgaard’s palm-free range of emulsifiers now launched in the marketplace, its customers have begun exploring their process parameters with the company. In some cases, they are working on existing recipes, trying various avenues to achieve a product of similar quality in a palm-free format. For other customers, the firm is able to provide a ready-to-go margarine recipe that has been tested in pilot labs. All that is needed on the customer’s part is to apply a little know-how to bring the recipe to life on the customer’s production line. Palsgaard is also able to advise on potential supplier issues, having evaluated many of the commonly available oil alternatives. What will the future hold for palm-free products? Many of the food industry’s largest brands and their ingredient suppliers have begun insisting on RSPO certified sustainable palm raw materials, forcing plantation owners in palm oil exporting countries to comply with strict rules. In February 2018, for example, industry giant Unilever made a groundbreaking announcement that it would publish a complete description of all the suppliers and mills from which it sources palm oil – a move that supports full palm oil supply chain transparency and represents a major milestone in the journey towards a more sustainable palm oil industry. l This article was written by Anders Mølbak Jensen, global product and application manager, Lipid & Fine Foods Palsgaard A/S.

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T RAN SPOR T & LOGISTIC S

India’s ports and imports Sunder Singh examines the five largest edible oil ports in India and how they plan to keep up with growing imports brought on by an increasingly wealthy and growing population

I

ndia is one of the largest consumers of edible oil globally and the world’s largest importer. Due to limited domestic production of oilseeds, the country is forced to import about 70% of its total edible oil needs. In fact, edible oil is the third largest item the country imports – worth INR700bn (US$10.8bn)/year. Huge imports of edible oil make the importing ports and their facilities some of the most critical parts of the edible oil supply chain and for determining retail prices of various edible oils. India has been an importer of edible oil for a long time because of a mismatch between demand and domestic oilseed production. In recent years, the supply shortfall has widened rapidly, driven by rising incomes and the population pressure caused by the country’s 1.28bn people. India’s edible oil imports are registering a steady growth year after year. Looking at the current agriculture pattern and scarcity of agricultural land for oilseed production, imports are likely to maintain an upward trend for the foreseeable future. India’s palm oil imports have jumped from 1.66M tonnes in 2014/15 to 2.87M tonnes in 2016/17, up by 73% in the last two years. Similarly, soyabean oil imports have registered a quantum jump over the years. In 2012/13, imports were just 1.09M tonnes, which increased to 3.31M tonnes in 2016/17. Sunflower oil imports increased from 1.51M tonnes

FIGURE 1: MAJOR INDIAN PORTS HANDLING EDIBLE OIL IMPORTS

Mundra

Kandla

Bedi

Haldia Paradip

Mumbai

JNPT Vizag Kakinada

Goa

Krishnapatnam Chennai

Mangalore

Pondicherry Nagapattinam Tuticorin

in 2015/16 to 2.17M tonnes in 2016/17. The import of refined oils accounted for 19%, whereas crude oils accounted for 81% of the total imports. The just concluded oil marketing year (November 2016-October 2017) was the third consecutive year when imported refined oils increased their share in the total edible oil imports basket.

Import tax hike of the decade India’s edible oil imports – both palm and soya – are likely to drop by a few percentage points after the government raised import taxes to the highest levels in more than a decade. In mid-November 2017, the Indian government raised the import duty on crude palm oil to 30% from the 15%. The import duty for refined palm oil has been increased to 40% from 25%. The import tax on crude soya oil, which earlier was 17.5%, has been raised to 30%. Similarly, the import tax on refined soya oil has been increased to 35% from the earlier 20%. The bulk of India’s palm oil imports come mostly from Indonesia and Malaysia, whereas soya oil is

Top five edible oil ports Other edible oil ports

mostly imported from Argentina and Brazil. “The overall import volumes are unlikely to change significantly for the entire financial year (April 2017- March 2018) as local oilseed supplies are limited and there is a huge demand,” according to B V Mehta, executive director of Solvent Extractors Association of India (SEA). Edible oil producers are also moving to ports. Emami Agrotech, part of Kolkata-based Emami Group, which has one of the largest port-based edible oil refineries of 4,000 tonnes/day at Haldia Port in West Bengal, alongside another 1,300 tonnes/day refinery at Krishnapatnam Port in Andhra Pradesh, has recently acquired land near Kandla Port in Gujarat. The company expects to build an oil refinery there in 15 months. It is also in final stages of discussion to buy land near another sizable edible oil importing port, Jawaharlal Nehru Port (JNPT) near Mumbai.

Major edible oil importing ports With a coastline of 7,517km, India has 12 major sea ports dotted across its eastern and western shores

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TABLE 1: EDIBLE OIL IMPORTS THROUGH INDIA’S FIVE LARGEST PORTS, TONNES

Port

Refined oils RBD palm

Crude oils Crude palm

Safflower

Sunflower

Total

Canola

Soyabean

Crude palm kernel

Kandla

557,989 403,957

1,888,154 1,590,584

6,090 -

102,928 7,200

255,184 319,690

1,705,232 2,154,625

499 7,242

4,516,076 4,483,298

Haldia

187,044 191,283

187,044 191,283

-

7,550 -

7,877

707,743 615,537

-

2,073,466 1,787,259

74,455 98,308

1,020,835 844,093

-

314,893 220,747

-

4,000

12,862 8,830

1,423,045 1,175,978

JNPT

317,226 323,346

365,404 327,622

-

372,419 241,560

-

202,165 384,114

14,499 19,000

1,271,713 1,304,642

Chennai

548,005 517,032

83,755 107,218

-

620,795 454,200

-

8,000 6,000

3,000 4,518

1,263,555 1,088,968

Krishnapatnam

SOURCE: SOLVENT EXTRACTORS’ ASSOCIATION OF INDIA

T RAN SPOR T & LOGISTIC S

FIGURES BETWEEN NOV 2016-SEP 2017, FIGURES BETWEEN NOV 2015-SEP 2016

managing in- and outgoing cargoes. The west coast has Kandla, Mumbai, JNPT, Marmagao, New Mangalore and Kochi (Cochin), while the eastern coast features Kolkata, Haldia, Paradip, Vishakhapatnam, Chennai (Madras), and Tuticorin. Vegetable oil imports are handled at a total of 17 ports in the country (see Figure 1, previous page). However, the top five ports – Kandla, Haldia, Krishnapatnam, JNPT and Chennai – account for more than 75% of total inwards shipments of edible oil in the country (see Table 1, above).

Kandla Port Located on the western coast in the state of Gujarat, Kandla Port is the busiest port in India and serves as the gateway for the edible oil trade from, and to, western and northern India. In the terms of vegetable oil cargo handling, Kandla Port is the leading port in India. To enhance cargo handling capacity and to handle bigger size vessels, Kandla Port has been focusing on various measures such as adding new and facilities and strengthening existing ones. According to Ravi Parmar, chairman of Kandla Port Trust (KPT): “From our present cargo handling capacity of about 115M tonnes/year, we aim to reach 185M tonnes by 2020. “We are in the process of investing about INR10bn (US$115M), of which INR4.15bn (US$64.3M) would include setting up two berths for dry cargo, two oil jetties and a rail over-bridge.” “At our port, we have an additional 7.5M tonnes of capacity that is ready for implementation. One of our major thrust areas is development of Kandla as a major liquid hub. About 60% of the cargo handled at Kandla is liquid, while the remainder is dry cargo,” Ravi adds. The KPT is in the process of implementing the landlord port model to unlock value from its 10,177ha land bank. In the landlord port model, the port authority retains the port infrastructure and regulatory functions, while port services are provided by private operators. Among key projects planned for this land bank is a smart industrial port city (SIPC), the first of 12 such cities the central government plans to develop at major ports across the country.

Haldia Port Located at the conflux of the Haldi and Hooghly rivers in the eastern state of West Bengal, Haldia port is the second largest reciever of edible oils in India. The port serves the edible oil needs of a vast hinterland comprising the entire northeast of India, including the states of West Bengal, Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, Assam, seven northeastern hill states and two landlocked neighbouring countries, namely Nepal and Bhutan. The Kolkata Port Trust plans to augment capacity at Haldia port by adding three new terminals at an estimated cost of INR8bn (US$124M). A total of 9M tonnes will be added to the existing handling capacity of 43M tonnes at the port. Of the three new terminals, one liquid cargo terminal of 2M tonnes, primarily for edible oil, has been proposed at Salukhali, 15km north of Haldia. Work on the expansion project is expected to begin in this fiscal year once environmental clearances are received. The new edible oil terminal will be developed on the public-private partnership (PPP) model.

Krishnapatnam Port In last five years, the privately built port of Krishnapatnam has steadily emerged as a hub for edible oil refineries on the eastern coast of India. In addition to its strategic location, Krishnapatnam has attained the status of a preferred port among edible oil producers in the country due to its dedicated and quality infrastructure. Located at Nellore district in the state of Andhra Pradesh, Krishnapatnam has taken away a lot of edible oil import business from Chennai Port, located 180km away and which received the bulk of edible oil imports on the southeastern coast a few years back. Krishnapatnam Port enjoys a strategic location for edible oil imports, covering the states of Andhra Pradesh, Telengana, Karnataka and Tamil Nadu. Major consumption centres, such as Hyderabad (490km away), Bengaluru (380km) and Chennai (180km) can be serviced from the port. Major edible oil refineries have realised this business potential and are already operational around Krishnapatnam Port, while others are in the process of setting up their refining units.

Currently, six edible oil refineries are operational in the vicinity of the port. These include South India Edible Oils at 1,000 tonnes/day, Emami Foods at 1,300 tonnes, Adani Wilmar at 650 tonnes, Saraiwala Agri Refineries at 1,000 tonnes, Gemini Oils at 800 tonnes and Foods, Fats and Fertilizers at 650 tonnes. The port provides a 16-inch diameter pipeline facility – with a pipeline length of 6.5km – directly from berth to the refineries with high discharge rates of up to 600 tonnes/hour. As a result, demurrage at Krishnapatnam Port is minimal. Port authorities are in the process of developing a second pipeline for discharging edible oils from the ships to refineries. The port provides a dedicated berth for edible oil vessels and has dedicated tanks with heating facilities and heat tracing facility in the pipelines from the tank to the loading point for vegetable oils.

Jawaharlal Nehru Port (JNPT) Formerly known as Nhava Sheva port, JNPT is a relatively new port, first opened in 1989. It is built on an island about 10km from Mumbai. The main purpose of the port is to alleviate pressure on the Mumbai port. JNPT is the biggest container handling port in India, handling around 44% of the country’s containerised cargo. It has crossed the landmark of 4M twenty-foot equivalent units (TEUs) in container bulk consecutively for the last five years.

Chennai Chennai is the oldest artificial harbour on the east coast of India. It does not possess a natural harbour and so an artificial one has been created in an area of 80ha near the coast. Once the hub of edible oil imports for entire southeastern region, Chennai Port has lost some edible oil import business to Krishnapatnam Port in recent years. However, the port is one of the most important edible oil importing ports due to the significance of its hinterland, which encompasses a large part of Tamil Nadu, the southern part of Andhra Pradesh and some parts of Karnataka.  l Sunder Singh is a freelance journalist

35 OFI – MAY 2018 www.ofimagazine.com

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STATISTIC S

EU SUN SEED AND OIL PRICES, 2016-18 (USD/TONNE)

STATISTICAL NEWS FROM MINTEC

GLOBAL SUN OIL PRODUCTION AND EXPORTS, 2015-17

Butter EU butter prices reached record highs in autumn 2017, with an 88% y-o-y increase. By January 2018, increased milk production and price-sensitive consumers switching to cheaper vegetable oil alternatives had EU butter exports falling 17% m-o-m, pressuring butter prices downwards. Looking ahead in 2018, milk production is set to increase with the spring flush, resulting in growing dairy production. Output of butter is likely to expand in the first half of 2018, depressing prices. However, butter prices are likely to remain historically high. Storing butter to wait for prices to increase in Q3 and Q4 of 2018 may be an attractive prospect for producers.

EU BUTTER PRICE, 2016-18 (€/TONNE)

PRICES OF SELECTED OILS (US$/TONNE) 2017

Dec 17

Feb 18

Mar 18

Soyabean

829.0

842.4

836.1

822.9

823.1

825.1

Crude Palm

690.0

680.5

690.5

691.8

684.1

680.8

Palm Olein Coconut Rapeseed Sunflower

Jan 18

Apr 18

661.0

644.5

660.3

672.6

656.5

660.6

1,537.0

1,448.1

1,393.3

1,245.0

1,124.3

1,143.1

855.0

862.7

841.1

821.9

795.2

790.4

800.0

785.6

805.0

799.5

798.5

814.6

1,250.0

1,282.4

1,250.0

1,142.9

1,019.5

1,026.7

Average price

946.0

935.0

925.0

885.0

843.0

849.0

Index

224.0

222.0

219.0

210.0

200.0

201.0

Palm Kernel

Sunflower seeds and oil Sunflower seed prices from Russia and Ukraine rose at the start of the year, as unfavourable weather conditions delayed sowings. Sunflower seeds from Ukraine are now showing an upward movement of 9% since January 2018, with Russian prices also up 5%. Overall global production of sunflower oil is forecast to decline 1% y-o-y, with Russia down 2% and Ukraine down 12%. Weather has improved in recent weeks and sowing has now commenced, which should ease any further upward movements. Although production is down 14% in Ukraine and 15% in Russia y-o-y, 2016/17 was a record breaking season and when compared to the previous five-year average, production is up 24% and 18% respectively. However, demand is up 21% worldwide, seeing global ending stocks fall 22%. This is following a rise in domestic consumption for sunflower oil, up 4% y-o-y globally and 25% when comparing to the five-year average. The European market remains relatively stable overall, with oilseed prices unchanged from January 2018 and sunflower oil showing a 4% increase. Sunflower seed production is forecast up 12% y-o-y and ending stocks are forecast to rise 12% in 2017/18.

Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the world’s most prestigious brands to make informed commercial decisions. Tel: +44 (0) 1628 851313 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com

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