Tuesday 27 Feb 2024
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PUTRAJAYA (Nov 1): Hong Seng Consolidated Bhd (formerly known as MSCM Holdings Bhd) kicked off the construction of a nitrile butadiene latex (NBL) plant in Kedah which is estimated to contribute annual revenue of RM4.22 billion upon completion.

The NBL plant, which is located in Kedah Rubber City (KRC), would cost the company RM3 billion and is aimed to be completed in stages over four phases with the targeted full production capacity of 960 kilo-tonnes per annum (KTPA).

The first phase of 240 KTPA is expected to commence its commercial production by the second quarter of 2024.

“This means that we will end up contributing up to 20% of the world’s total NBL supply, (upon full completion of the NBL plant) which will help the country reduce its dependency on NBL imports and reduce the national trade deficit by RM5.5 billion,” Hong Seng group managing director Datuk Seri Teoh Hai Hin said in a welcome speech at the groundbreaking ceremony for the NBL plant.  

According to Teoh, Malaysia’s glove industry consumed RM6.6 billion worth of NBL in 2020 and roughly 70% of it or RM4.6 billion was imported from China, Korea, Japan, Thailand and other countries.

“This is where the opportunity comes into play — in fact in 2020, 50% to 60% of nitrile glove production is attributed to the key component, NBL,” he added.

For Hong Seng, the projected annual revenue upon completion of the full 960 KTPA production is RM4.22 billion, he said, noting that in a longer term horizon, the total estimated revenue from 2024 to 2031 will amount to RM18 billion.

Teoh explained that this flagship project will position Hong Seng as the first public-listed and large-scale nitrile producer in Malaysia.

“This is a game-changer for KRC, as it contributes to the reduction of carbon footprint in the supply chain process and improvement of social economic development in the northern region of Malaysia.

“In addition to reducing the local region’s nitrile latex imports and the national trade deficit by approximately RM5 billion, up to RM5 billion in private investment and 1,600 job opportunities will be created from all these investments, which will be a catalyst for economic recovery for those who have been affected by the pandemic,” he said.

To spearhead the NBL project, Hong Seng's wholly-owned subsidiary Hong Seng Industries Sdn Bhd (HSI) also signed a master services and licence agreement with Pacific Hemisphere Sdn Bhd (PCF) as its technology provider.

“PCF has previously worked with NBL manufacturers in the US, Europe, China and Malaysia, and now they will be in charge of developing the cutting-edge NBL technology that Hong Seng will be using. The NBL produced by Hong Seng will be designed to meet the increasing demands of today’s glove market, while adhering to international quality standards. It creates an end product with excellent physical properties and characteristics that gives it a competitive edge over the choices available in the market currently,” Teoh said.

In a separate agenda during the event, Hong Seng’s wholly-owned subsidiary HS Petchem Logistics Sdn Bhd officially received a letter of offer from Penang Port Sdn Bhd to sublease a piece of 12,140 sq m leasehold land for 20 years.

This is to construct and operate a tank farm facility for feedstock storage of core materials for nitrile latex production while providing integrated logistics services. The construction is expected to be completed within 18 months in sync with the production commencement of the NBL project.

The company said that due to the rise in demand for nitrile gloves, the raw materials required are also in severe shortages, therefore by setting up its own feedstocks tank farm facilities, Hong Seng will be able to capture a substantial market and fill up a void in the supply chain.

“We are proud to be part of Malaysia’s federal initiative and this project, which will not only be an important catalyst for the global nitrile glove ecosystem but also contribute towards strengthening Malaysia’s dominance in the glove and rubber industries. We would also like to thank our government for assisting to grow and put our NBL production capabilities out to the world through efforts such as establishment of the economic corridors,” concluded Teoh.

To recap, Hong Seng, via HSI, accepted a letter of offer on Feb 16, 2021 issued by Northern Corridor Implementation Authority (NCIA) to sublease 102.6 acres of industrial land located at KRC for a period of 60 years for the purpose of setting up an NBL manufacturing plant.

Subsequently, on June 25, 2021, HSI entered into a sublease agreement with NCIA for the said industrial land for RM44.69 million over the 60 years period.

The groundbreaking event, which took place in Putrajaya on Monday, was attended by Menteri Besar of Kedah Datuk Seri Muhammad Sanusi Md Nor, Minister of Rural Development and Padang Terap member of Parliament Datuk Seri Mahdzir Khalid and chief executive of the NCIA Datuk Seri Jebasingam Issace John.

Hong Seng's share price rose 13 sen or 3.88% to RM3.48 on noon market break on Monday.

At RM3.48, it has a market value of RM8.88 billion.

Edited ByJoyce Goh
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