Chemrez plans $15-M expansion

MANILA, Philippines - Top biodiesel firm Chemrez Technologies Inc. plans to invest up to $15 million to expand its capacity in the next three years to serve its growing US export market.

“In terms of investment, we have to pour in $15 million in investments to meet that demand,” Chemrez managing director and COO Dean Lao Jr. told reporters.

He said the proposed budget would support the purchase of equipment.

“We now have a capacity of 90,000 metric tons inclusive of oleochemicals and coco-methyl ester (CME). And we still have room to expand. Quite often what we do would be value-adding. We don’t need a new plant, but just new equipment,” he said.

He said they would consider tapping the financial markets to raise the capital for the capacity expansion.

“We still have to look at it. It has yet to be discussed. Going to the market is always an option,” he said.

The expansion, he said, would also support the company’s goal to increase the share of export in its business to 50 percent in 2014. At present, Chemrez’s exports account for 20 percent of its business.

Lao said the company is seeing the US market as a big potential market for export growth.

“But the US is still a growing market for us. We just started. We’re starting to talk with several distributors and we’ve also been engaged on joint marketing sales calls. We go to end-users or clients,” he said.

He said they would be concentrating on penetrating the US market in the next three years.

“For the US, when you look at the sophistication of their hair and body shampoo - they have a huge market for that. And their preference for using coconut-based ingredients is also big. Another good thing for our clients in the US, a lot of them prefer quarterly contracts - which is not too much erratic and not spot-based. They’re easier to deal with for time-based contracts,” he said.

Aside from the US, he said they would continue to serve their other existing big markets.

“The largest will be Japan and Thailand, and a very good potential for dramatic growth is the US market. It’s also in US where we appointed large distributors,” he said.

Lao said they would need to expand their export market as the local market for oleochemicals, which is the primary source of income of Chemrez, is narrowing down.

“Hopefully our export sales would comprise half of our total turnover and we’re hoping it would happen by 2014. The size of the local market is a little bit flat already, the manufacturing industry is not so much growing anymore. The Philippines is moving more and more into a trading and distribution market. But one of our strategies is we’re using products derived from a local feedstock as our competitive advantage,” he said.