Can you give us a brief history of your company?
HIDEAKI UEOKA Fatty Chemical was established in 1988 as a joint venture between a Japanese and a Malaysian company. Our main products are fatty alcohol and refined glycerin, which are used as chemical intermediates. We mainly operate in the B2B landscape, and our main clients are our mother company Kao Group and its affiliates around the region, in the US, Europe, and Asia. About 10% of our production is sold to other suppliers. We have 240 employees, and our total capacity stands at around 200,000 tons per year, with sales amounting to MYR1 billion. We operate nearly at full capacity, so we cannot increase current production. Our original capacity was 35,000 tons per year, which we increased gradually over the years. If the possibility arises, we will increase our capacity; we are looking for land close to our current factory.
What was the vision behind choosing Malaysia for Tosoh's first overseas high-silica zeolite (HSZ) facility?
MIKIO OMORI This decision came from a feeling of responsibility to ensure the stable supply of HSZ to all customers around the world, as our previous HSZ plants were both located in Japan. The strategic location of Malaysia provides us an opportunity to target the Asia market and secure the access merit to the main market. Besides the stability of politics in Malaysia, the government's active investment policies and strong support in terms of infrastructure and tax exemption also attracted us. Besides, most Malaysians speak English. This enables Tosoh to transfer technology easily and efficiently.
How do you assess your contribution to the development of Malaysia's chemical industry?
HU Fatty Chemical has contributed to the developments of Malaysia's palm oil and oleochemical industries. We purchase many kinds of raw materials locally, such as palm oil and fatty acid, which are produced by Malaysian companies. Subsequently, almost 90% of our products are exported.
What have been your main developments and milestones since commencing operations in 2017?
MO We started our commercial operation in April 2017 and proceeded with our first shipment in May 2017. Upon commencing operations, we sent back most of our Japanese expatriates to Japan, and our plant is now fully operated by local manpower. 2018 was a tough year for us. Other than ensuring the stable operation of our new plant, we also went gone through the ISO certification process. The hard work paid off when we received ISO 9001 and ISO 14001 certifications in February.
Do you see compelling new growth businesses or derivatives that you would like to tap into?
HU In 2018, we invested in a new facility and an entirely new surfactant for Kao Group. We were previously content with just the sale of fatty alcohol; however, as several competitors started to enter this field, it has become a commodity, and we cannot rely on fatty alcohol alone. Our strategy has been to shift to producing value-added products. One option was to switch to derivatives. If we can produce new types of derivatives, we can enjoy additional profits. That is why we invested in new facilities and products in 2018. If possible, we want to start new types of oleochemicals. Kao Group's R&D division is always researching new products, and in 2018 we launched a new type of oleochemical. Biodiesel is an expanding industry and is produced from fats and glycerin byproducts. Technically, new types of glycerin derivatives are difficult to produce. If we can produce a good glycerin derivative, it would benefit us.
What are the main applications for HSZ, and what are your key export markets?
MO Tosoh's HSZ is widely used for automobile catalysts and VOC traps as well as in oil refineries and the petrochemical industry. HSZ reduces the exhaust emission by aiding in adsorption and decomposition of hydrocarbon and nitrogen oxides in exhaust gas. At present, our key markets are the automobile and petrochemistry industries. However, the demand for HSZ is expected to continue growing due to changes in lifestyle and enforcement of environment-related regulations in developing countries, which expand the demand for VOC adsorption application.