This article first appeared in The Edge Malaysia Weekly on September 1, 2025 - September 7, 2025

SAMLING Group, a low-profile conglomerate best known for its timber business, is aiming to go green in a big way. The group, controlled by the family of prominent Sarawak businessman Tan Sri Yaw Teck Seng, is working with Japanese partners led by Kobe Steel Group to develop a facility to produce black pellets — a wood-based biomass alternative to coal in power plants.

The facility, planned in Sarawak, could potentially be Asia’s — if not the world’s — largest, and will cater for the rising demand for low-carbon solutions along the global electricity supply chain.

But a question beckons: how green and how ready is this venture, really?

To start with, Samling — one of Malaysia’s largest timber players — had in the past often been dragged into the spotlight due to allegations of wrongdoing in relation to its logging practices in Sarawak. Furthermore, black pellets are still burned in coal power plants, as well as furnaces in industrial heat production for purposes such as steelmaking.

Samling group CEO Lawrence Chia, in his first exclusive interview in three years, speaks at length to clear the air about the group’s shift away from unsustainable logging. He also explains why black pellet production makes sense, not just for the group but also for the region in the age of environmental awareness.

“We want to do the same thing that the nation says it wants to do [that is, going into cleaner energy]; bring in technology, create jobs … We want to be able to say that we contribute,” he says. “Malaysia must not miss the opportunity.”

Pahang-born Chia was handpicked by Yaw in 2017 to lead Samling following his retirement from Deloitte China (he was named one of the 10 most prominent finance professionals in China). Chia was brought in to help the group,  currently led by Yaw’s son and executive chairman Datuk Seri Yaw Chee Ming, amid the shifting operating landscape.

Chia says he pushed for the end of logging activities in natural forests. These days, the group’s timber industry is focused on forest plantations, which are replanted for sustainable logging, like in New Zealand.

An accountant by training, Chia sees the production of energy pellets as a natural extension of the group’s wood venture. This is because pellets make use of the parts of a tree left over from wood production — as much as 40% of the tree’s entirety — thus reducing wastage and adding value to the byproducts.

There are two types of wood-based energy pellets. One is the white pellet, which is about 40% less efficient than coal in terms of calorific value (or how much heat energy it can generate). Samling has been producing 140,000 tonnes of these per year in an existing facility in Bintulu which was commissioned in 2022, via subsidiary TreeOne Megapellet Sdn Bhd. The pellets are sold to a power producer in Japan.

This feedstock can be upgraded into black pellet through torrefaction — a process that semi-carbonises the product, making it more energy-dense for improved thermal efficiency, and hydrophobic for ease of bulk handling.

A 2024 study reported that black pellets carry 16 times less carbon dioxide emissions throughout their life cycle compared with coal. This is mainly because they include tree replanting as carbon basins and future feedstock, as opposed to coal that is dug out without any element of circular economy.

To Chia, if done right, the new venture by Samling could be a “game changer” in Malaysia’s pursuit of green energy opportunities. This takes into account the country’s foothold in the sustainable wood industry, the inherent quality of its wood material, and readiness of torrefaction technology from the Japanese partners versus other emerging technologies like hydrogen and green ammonia. Rising biomass demand is also another key factor that justifies building an integrated supply chain, he says.

“Black pellets cannot solve the problem [of emissions] because there is not enough feedstock in the world. But so far, it is the one that can be implemented straight away.”

Under its letter of intent with Kobe Steel, Samling has an ambitious initial capacity target of 300,000 tonnes of black pellets per year — more than double its current white pellet output — with plans to increase it to two million tonnes eventually.

Japan and South Korea have become the largest importers of white pellets after Europe, driven by renewable energy subsidies for biomass co-firing. China is also rolling out biomass targets that could boost demand further. Globally, there are over 2,100gw worth of coal-fired power plant capacity, of which 80% are in Asia, according to July 2025 data by Global Energy Monitor. That’s one fifth of global electricity generation capacity.

Competition for this market is certainly heating up. Vietnam is the largest exporter of white pellets in Southeast Asia. Indonesia is building the world’s single largest white pellet plant in Sulawesi with a final capacity of 900,000 tonnes a year, while Japan’s power outfit Idemitsu alone is targeting three million tonnes of black pellet supply by 2030.

In Thailand, Blackwood Technology BV’s plant using corn straw is ramping up to 75,000 tonnes, while in Malaysia, Wilhelmina’s TG2 pilot black pellet project in Kuantan is already operational with plans for 120,000 tonnes from oil palm empty-fruit-bunch feedstock.

Chia stresses that wood-based black pellets offer more consistency and efficiency than other raw materials. Elsewhere, there are also instances where suppliers falsely claim to use feedstock from certified plantations.

“Buyers are getting wary … we are not a big producer [right now], but we make sure everything is done properly. Our pellets today are accepted in Europe. We only deal with certified forests, we have the highest level of certification [for pellet production] and we want to maintain that.”

Unfortunately, that same advantage (certification) also presents a challenge for Samling to meet future demand based on its existing feedstock production capacity, Chia explains.

Although Samling has around one million hectares of timber concessions, less than half is categorised as industrial tree plantations, and it is active in less than 10% of the entire concession.

Having stopped logging its 800,000ha of natural forest concessions, it is now operating only on around 200,000 acres of plantation land.

The way Chia puts it, securing more plantation concessions, where it has to pay for the existing trees, is critical to ensuring feedstock supply, covering initial capacity targets and justifying the billions of ringgit of investment into the black pellet facility in Bintulu. The group has relayed this need to the Sarawak government. That said, more plantation concessions also means more sustainably-sourced timber will continue to feed its sawmills. It was stated in a 2024 Sustainable Biomass Program certification report that there were only slightly over 551,000ha of total planted area in Sarawak as at 2021.

At the same time, Sarawak’s infrastructure must be ready. Samling currently ships its white pellets from Bintulu port, which can handle bulk ships of up to 60,000 deadweight tonnes. While this is superior to competitors such as Vietnam with its smaller ports, it will not be long before the infrastructure of other countries catches up. The port operation is in the midst of being transferred from the federal government to the state government. “It’s more of the question of whether we can deliver and meet the demand … can we do big shipments, and things like that,” Chia says.

For Samling, its white pellet venture is sufficient to close the loop on its existing timber plantation value chain. In fact, interestingly, its timber operation is no longer the biggest earnings contributor to Samling, which also has businesses in property and oil palm.

Samling is the largest shareholder of property developer Perdana ParkCity Sdn Bhd with an effective shareholding of 45%. It also holds a controlling stake in mid-sized plantation firm Glenealy Plantations Sdn Bhd, which operates almost 40,000ha of planted area in Sabah, Sarawak and Indonesia.

In the financial year ended June 30, 2024, Samling Strategic Corp Sdn Bhd — the group’s main timber outfit — posted a net profit of RM85.8 million at company level, as compared with RM133.2 million by Perdana ParkCity and RM56.9 million by Glenealy in the same period.

Apart from Samling, the Yaw family’s flagship operations also include Wearnes-Starchase Ltd, a leading luxury automotive retailer in Southeast Asia with over a dozen brands under its belt and a huge presence in dealerships across China. It also imports Aston Martin and Bentley cars into Malaysia.

During the over three-hour-long interview, Chia explains the realities of the timber business that propelled the Samling Group in its early days.

“Wood,” he says, “is a personal thing.”

He continues: “You may like this table because it is made of Meranti. You may not like another [type of] wood, right? [But] we (Samling) [are left with] two [replanted] species — acacia and the eucalyptus. We have made a decision not to use natural [forests to procure our] wood.

“Why? For conservation purposes. If you can move into plantations, there is no necessity for you to cut the natural forest and [you can] let them grow,” says Chia, who had initially planned to stay for just three years with Samling but has now been with the group for close to a decade.

So, why go into biomass? Chia says it is crucial to ensure the sustainability of its wood business, not just for shareholders but also the 5,000 employees that Samling employs, of which the majority are from the ethnic communities.

The biomass venture started as a means to recover the cost of replanting. “But it can be a lucrative business. We do not know [how big it can be] because it is so new.”

For Malaysia, securing a large-scale black pellet torrefaction facility could make the country a regional hub with better economies of scale compared with having multiple facilities in the region.

It would not be the first time Malaysia contributes to the development of regional-scale supply chains in the natural resources segment. In oil palm, Malaysia is the second-largest producer after Indonesia, and is home to many of the largest downstream players globally. National oil firm Petroliam Nasional Bhd is a major exporter of liquefied natural gas, and has operated its Bintulu LNG facility since the 1980s — now one of the world’s largest single-location facilities.

This energy pellet sector is another “low hanging fruit” for Malaysia, adds Chia. “[More countries] are coming in [to secure their supply] … We have everything in our backyard. It should be a national effort.” 

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