KUALA LUMPUR (Feb 6): PLS Plantations Bhd (KL:PLS) has signed agreements for partnership and research with Nippon Paper to explore development of large-scale eucalyptus farming in Malaysia.

The three-year collaboration aims to assess the commercial feasibility of planting 20,000 to 30,000 hectares of eucalyptus — used for its medicinal, industrial and aromatic properties — combining PLS’ operational capabilities with Nippon Paper’s expertise in forestry management.

Under the joint research agreement, PLS’ subsidiary Aramijaya Agri & Agro Sdn Bhd will host pilot sites in Johor, where Nippon Paper experts will provide guidance on plantation productivity, silviculture and research protocols.

The study will evaluate potential applications for woodchips, sawn timber, biomass feedstock and carbon credits.

If successful, PLS and Nippon Paper plan to establish additional research plots in Pahang.

"We are excited to advance this collaboration with Nippon Paper Group, including evaluating potential downstream activities such as pellet production for biomass applications," said PLS CEO Lee Hun Kheng.

For Nippon Paper, which specialises in manufacturing paper and forest products such as logs and lumber, the collaboration with PLS is an important step forward for eucalyptus also used as a raw material for pulp and paper due to its fast growth and strong resistance to diseases.

However, the development of eucalyptus plantations in Malaysia remains “challenging” and Nippon Paper will apply its expertise and know-how to advance toward “future business implementation”, said Koichi Sato, an executive officer of Nippon Paper.