Cirro Capital Ltd — a Malaysian-based investment company — has invested approximately US$5 million (RM21.17 million) to acquire a stake in a local palm oil plantation as part of the effort to leverage on rising crude palm oil (CPO) prices.
CEO Nicholas Chesson said CPO demand will rise in tandem with ongoing developments in China’s One Belt, One Road trade initiative.
He, however, did not disclose further details on the investment itself.
“We believe that the demand for CPO will continue to rise as the Belt and Road initiative has only just begun, with the project to continue to require large amounts of renewable fuels over the next 15 to 25 years,” Chesson said in a statement last Friday.
“With no alternative energy source available at the same speed and price, palm oil is just about the only option countries and companies can count on for now.”
Cirro Capital targets One Belt, One Road-related projects or other projects and assets that play a supportive role in the trade initiative, including the supply of CPO to China.
The investment firm said it is among the many companies that have moved to acquire CPO production resources in South-East Asia, adding that both Malaysia and Indonesia — the two largest palm exporters globally — have secured over 200 direct investments into production facilities since 2015.
“In the same period, the price of CPO has risen from above US$400 to above US$700 per metric tonne,” it said.
The sharp jump in prices is believed to be attributable to China’s One Belt, One Road project which aims to reconstruct the trade routes between the eastern and western regions of Asia via the Ancient Silk Road Economic Belt and 21st Century Mari- time Silk Road.
Cirro Capital said the mega project — which involves over 70 countries and international organisations — requires large amounts of
logistics support in the form of rail and road transportation, adding that China has dedicated substantial capital in helping countries along the trade routes improve their infrastructure.
“The fact that trains and transport vehicles run primarily in diesel, and that bio-diesel derived from the refining of crude palm oil is the only renewable replacement for conventional diesel, are the main reasons the demand of palm oil has suddenly escalated,” the firm said. — TMR