Palm Oil Milling Initiatives Chew Chien Lye @ Mervin Research & Development, Sime Darby Plantation Berhad June 17, 2019 OUTLINE

The Truth about Palm Oil | Palm Oil Milling Initiatives Chew Chien Lye @ Mervin Research & Development, Sime Darby Plantation Berhad June 17, 2019 OUTLINE

The Company

 Sime Darby Plantation – An Integrated Plantation Company

The Truth about Palm Oil

 Current Scenario & Challenges  Facts about Palm Oil

Palm Oil Milling Initiatives

 Overview on Milling Processes & Performance  Current Challenges & Research Prospect  Technological Development The Company

Sime Darby Plantation An Integrated Plantation Company 4 Business Overview Integrated Plantation Company

Plantation Research & Advisory Biotechnology & Breeding Provide technical support to maximize yield & Breeding for continuous improvement in yield & other productivity: desirable economic traits: • Continuous improvement in agro-management • Marker assisted breeding program practices • Optimisation production & performance of oil palm • Reduction in chemical inputs through IPM, biofertilsers clones & biopesticides • Improve nutrient & water use efficiency

Advanced Agricultural Tech Processing Technology Developing new technologies to support R&D and Audit & Advisory to maximise mill & refinery product Plantation operations: recovery: • Labour reduction through mechanisation • Continuous improvement in processing technology & automation to improve efficiency & cost • Precision Agriculture Data analytics • Towards zero waste • Waste to wealth initiatives

Sime Darby Seeds & Agricultural Services Innovation Centres Production & sale of elite planting materials Provide technical service to all global customers, Agro-technology and management services to external develop new products and provide technical support to parties refineries

Minamas Research Centre Liberia Research Centre OPRS Dami Regional research centres providing similar functions as PRA & Breeding for the local estates.

5 6 Upstream Portfolio Spread Across 5 Countries

HA . Landbank 1 mil ha . Planted area ~631,000 ha Excludes Plasma/ Outgrowers’ scheme (~100,000 ha)

. Oil Palm 96% % . Rubber & Sugarcane 4% . Cattle

Liberia Malaysia Papua New Guinea

. Estates 250 Indonesia Solomon # . Mills 71 Islands

. Crude Palm Oil 2.5 mil MT (Own Production) SDP accounts for MT . Palm Kernel 0.6 mil MT (Own Production) • ~4% of total world CPO production • ~ 20% of total world certified

The Truth about Palm Oil

Current Scenario & Challenges

Facts of Oil Palm 9 Rang-tan, the story of dirty palm oil Facts about palm oil?

24 March 2019 at Sime Darby Plantation, Carey Island, Selangor.

April 7, 2019

Source: MPOC

COPYRIGHT©2019 SIME DARBY RESEARCH SDN. BHD. ALL RIGHTS RESERVED. 14 Global Vegetable Oil Demand & Supply Population Growth is a Key Driver Mil MT Vegetable Oil Demand & Supply vs Population 9.7 Bil 300 10 8.5 7.8 8.1 7.3 7.4 250 6.9

6.5 8

258

250

>260

248 >

200 233

224 6

210

202 190

150 183 176

174 4 141

100 137

111 106 50 2 16.3 19.8 23.6 25.6 27.1 28.6 30.4 >30 0 0 2005 2010 2015 2017 2020 2025 2030 2050 Demand Supply Population (RHS) Demand/Capita kg

Source: USDA United States Department of Agriculture, Washington https://www.fas.usda.gov/commodities Oil World ISTA Mielke GmbH, Hamburg www.oilworld.biz

15.00 Vegetable Oil Demand per Capita 14.00 Palm Oil Demand per Capita 13.00 50 12.00 kg (2016) 11.00 (2016) 40 10.00 kg 9.00 8.00 30 7.00

44.85 6.00

4.03 3.93

20 8.80 5.00 3.51

35.03 4.00

10 3.00 6.86

6.07

10.98 24.25 15.86 25.03 2.00 1.00 0 0.00 US EU-28 China Latin India Africa EU-28 India Africa Latin US China America America

Note: Europe consumption per capita for EU-28 only, excludes Russia & Eastern Europe Source: LMC Oilseeds & Oils Report 2016, United Nations, USDA countries

Immense Opportunities Await…

. Growing population (9.7 bil by 2050) + increased life expectancy, raising concerns over Food Security, Food Safety and Sustainability

. Global oils and fats consumption expected to increase  From 180 mil MT to 250 mil MT in the future

. Dr. James Fry’s study in 2013 – that the world will lose 145 million Ha of Forest land by the year 2050 to feed the 9.7 billion people if it uses other edible oils such as Soya, Sunflower, Rapeseed etc. . With Oil Palm it will be less than 10 – 14 million Ha.

145 millions hectare is equivalent to?

145 millions 2x the size of 43x the size of 2,111x the size = or or Ha France Netherlands of Singapore

Source: James Fry (2016). What are the implications of a halt to all expansion in oil palm areas? PAC Seminar, Malaysian Palm Oil Board.

Immense Opportunities Await…

• Palm Oil plays a critical role in helping to feed 3 billion people in more than 150 countries worldwide

• Feeding another 2 billion people by the year 2050 is NO small feat

• Palm Oil will remain relevant as it is now an Irreplaceable part of the Global Food Supply Chain

• Palm Oil is expected to account for 55% of the Global Edible Oil Consumption in the next 35 years!

(Source: Global Oils & Fats. June 2017)

Palm Oil Milling Initiatives

Overview on Milling Processes & Performance

Current Challenges & Research Prospect

Technological Development 18

Oils Processing 19 From Oil Palm Tree to Edible Palm Oil

Estate Mill Refinery

Planting Palm Tree Storage Refining Quality Inspection

Clarifying Refining process

Threshing & Digesting Harvesting (Oil extraction)

Packaging / Drumming Sterilizing Reception Weighing Collecting

Shipping/ Milling Quality Delivery Inspection

FFB 1 Steam Sterilisation Condensate

2 Empty Threshing bunch 3 Digestion

4 Fibre & Nut 11 Pressing Depericarping Fibre Dilution water 5 12 Screening Nut Cracking

6 Recycled oil 13 Clarification Winnowing Shell

Oil Sludge 14 7 9 Claybath/ Shell Purification Sludge tank Hydrocyclone 8 10 15

Drying Centrifugation Drying Sludge Sludge

Crude palm oil Kernel 16 Treatment plant

Treated POME

• Same process for the past 30-40 years Stagnant process • Stagnant oil extraction and mill efficiency • Increase of operational cost

Additional New • New parameter such as 3-MCPD and GE Requirement

High Energy • Solid waste as fuel – tendency for low boiler efficiency Utilisation and • Malaysian commitment for 40% Carbon Emission reduction Carbon Footprint by year 2020

Stricter Emission and • More stringent effluent and boiler emission standard Discharge Limit • More CAPEX and OPEX utilisation

• Consumer perception on non-hygienic means of oil palm Perception fruits handling and processing during milling • GMP, HACCP, HALAL Certifications, etc

• El Nino affected the production of palm oil in Malaysia, Weather reduce productivity and increase cost of production

• Increase in wages Labour Issue • Human error

High Efficiency Low Processing High Value Economic 93% Oil Cost Products 96% Kernel RM20-25/FFB CPO, Kernel

Green Mill Environmental Zero Discharge Environmental Power 25-30kW Friendly Liquid waste POME 0.7-0.75/FFB DOE compliance Solid waste

Automation/ Compact Mill Technology Mechanization Multiple unit Minimal Labour Advancement Manpower, human operation 70-80 pax/mill error, hazard Large footprint

High Safety Standard Food Grade Standard Factory LTIFR

Example: High Efficiency Improvement 25 High Efficiency Improvement . OER is Oil Extraction Rate. Oil Input = OER + Oil Losses

Target Oil loss in press fibre 0.60% Oil loss in final effluent 0.40% Oil loss in empty bunch 0.30% Oil loss in decanter cake 0.10% Total oil loss <1.40%

shell

mesocarp

kernel 26 High Efficiency Improvement Separate Mesocarp Extraction Hot Water Screw Press-continuous process Fruit reception /Storage

Maceration / Stage I - Maceration Fibre & Nut & Nut Separation separation

Stage II - Tri- 1st Pressing compression Screw Station Press Stage III- Hydration Hydrator

Stage IV - Tri- 2nd Pressing compression Screw Station Press

Vibro-screen separator

 Evaluation conducted in 4- months period

 Results illustrates a 95% confident internal for a mean difference of 1% increase for oil recovery rate

 Maximising oil recovery/ Oil minimising oil losses

 To reduce biological load of raw POME i.e BOD, COD, SS, etc.  50-60% BOD & COD reduction  To ease and reduce effluent treatment plant cost.

Filtered POME Filtered  To support compliance to Membrane Raw POME the new DOE effluent Oil & Biosolid SS – 2-5% discharge limit.

Oil – 0.5-1.2% Recovery System Biosolid

 Biosolid recovery before effluent treatment plant (ETP)

Example: Environmental Friendly 30 Environmental Friendly

Department of Environment (DoE) has circulated new draft in 2015:  More stringent on treated effluent discharge  Proposed to be enforced by July, 2016 but deferred after hearing comments from industries.

Fresh Fruit Bunches (FFB)

Sterilisation Sterilliser condensate EFB: 22-23% to FFB Threshing Empty Fruits Bunch (EFB) Fibre: 12-13% to FFB Digestion/Pressing Centr.waste/ Shell: 6-8% to FFB Oil Room decanter h.phase Clarification/Oil Purification & Decanter solid POME: 60-75% to FFB Sludge Separation Hydrocyclone/ Kernel Recovery claybath waste

Plant Fibre Depericarping Nut Cracking Shell Kernel/Shell Separation

Excess fibre Power House Excess shell Boiler & Power Generation Boiler ash/ clinker Effluent Treatment Anaerobic solid Aerobic solid Plant Final Discharge Water

Sterilisation Sterilliser condensate Compost

Threshing Mulching in oil palm plantation Digestion/Pressing Empty Fruits Bunch Centr.waste/ (EFB) Oil Room decanter h.phase Clarification/Oil Organic Purification & fertilizer Sludge Separation Hydrocyclone/ claybath waste Kernel Recovery Decanter solid Plant Fibre Depericarping Nut Cracking Shell Compost Kernel/Shell Separation Excess fibre Power House Excess shell Road surface Boiler & Boiler ash/clinker Power Generation Surface landfill/compost Effluent Treatment Anaerobic solid Organic fertilizer Aerobic solid Plant Biogas Final Discharge Water Recycled as process CPO Water or boiler water Kernel feed COPYRIGHT©2019 SIME DARBY RESEARCH SDN. BHD. ALL RIGHTS RESERVED. 33 Environmental Friendly Effluent Treatment System

FFB

Composting Plant Polishing Plant

Oil Mill EFB Aerobic

Example: High Value Products -Oil Quality Improvement 35 Palm Oil Washing with Bio-based Solution

BAS

Treated Oil Storage Tank

Vacuum Sepa- Dryer Mixing Buffer rator Pure Oil Tank Tank Tank

Effluent Sludge Oil Tank

Quality Improvement Plant • Improve the CPO quality (FFA, 3-MCPD)

• Highly Commended for Palm Oil Award, IChemE 2018

• Improve the CPO quality

• Reduce Steam Consumption

• Reduce Oil Loss in EFB

• Patent filing: PI 2018000689 (Malaysia)

Example: Technology Advancement Improvement 38 Experimental Plant

• Carey Island • Fundamental Study Pilot Plant • Control Trials • Laboratory to pilot scale trials

• Bestari Jaya • Pilot to commercial study Experimental • 200+ sensors Station • Pilot to commercial trial • Mill optimization

Appendix 41 The Truth

Global Oilseed Harvested Area (mil ha)

Sunflower Oil Palm Oil 20 27 Others 82 Rapeseed Oil 33

126

Soya Bean Oil Source: FAO, Oil World 17/18

Green cover for 97% of the total oil palm areas

The oil palm industry is a net carbon sink

Oil Palm plantations are capable of removing as much CO2 as tropical forests Source: MPOC, The New Straits Times, MPOB, Oil World 17/18, Palm Oil Action Group Australia, The Guardian 2014

Behind beef, soy is the second largest agricultural driver of deforestation worldwide.

Source: WWF 2018 43

The company initiative

http://www.simedarbyplantation.com/sustainability/our-sustainability-journey 44

http://www.simedarbyplantation.com/sustainability/beliefs-progress/practices-key-initiatives/good-agricultural-practices/new-planting 45

http://www.simedarbyplantation.com/sustainability/crosscheck 46

http://www.simedarbyplantation.com/sustainability/responsible-agriculture-charter 47 TM 100 ha 1000 Full replant GenomeSelect 2016 ha pa 2022

16% yield improvement = feed 15 million people without any extra land