New head for Emery
Dr Kongkrapan Intarajang is the new Group CEO of Emery Oleochemicals, formerly Cognis Oleochemicals Malaysia. With his senior background in Thailand’s largest petrochemical company, what is he hoping to bring to Emery Oleochemicals? Alan Brunskill meets him in London to find out
Dr Kongkrapan Intarajang is a rare species among business leaders – relaxed, happy with life, doing what he likes and wants to do. He had always known what he wanted to do. When studying engineering, he liked it so much that he followed his first degree with a PhD in the USA. When asked what he had got out of being in the USA for several years, his immediate response was that he learned to play golf. So immediate, in fact, that it made this interviewer wonder if that had been his major with chemical engineering as a subsidiary!
Dr Kongkrapan’s business career seems to have continued a seamless route to success, with experiences in corporate strategy, mergers and acquisitions, R&D, business development, finance and joint ventures. As he had been involved in the acquisition deal and creation of the Emery Oleochemicals joint venture from the earliest days of cooperation on the alcohol and ethoxylate joint ventures with Cognis, his wide experience of the different disciplines has been very valuable.
Emery Oleochemicals is the new name for Cognis Oleochemicals Malaysia, and is a 50:50 joint venture between Sime Darby Plantation Sdn Bhd of Malaysia and PTT Chemical International Private Ltd of Thailand.
Image gallery
As a newcomer to oleochemicals, how do you perceive the industry?
“Not a small industry, but not big compared to petrochemicals. More entrepreneurial than structured and less disciplined. Too much capacity, and more restructuring is needed.”
Expanding on these initial comments Dr Kongkrapan obviously thought that the industry had expanded without too much collective thought as the palm oil industry charged downstream (build the capacity and worry later), and stayed focused on its surfactant owner origins and, relatively, ignored the potential opportunities for oleochemicals in traditional petrochemical applications. When asked where he thought restructuring/capacity reduction should happen, he mentioned the recent closure of UK capacity as a welcome first move.
What effect has the global economic problems had on the industry?
“The end of 2008 and the first half of 2009 were very bad, sales volumes tanked and margins fell sharply. Things have improved in the second half as customers have needed to buy after being out of the market. Downstream businesses such as plastic additives are recovering quickly. These have helped margins to recover but volumes are still down. Of course the over-capacity situation has not helped during this period.”
Looking at Emery Oleochemicals’ production capabilities, you are strong in North America and Europe, yet your basic oleochemical capacity in Asia is small compared to your competitors like KLK, IOI and Wilmar. Do you think you need to be bigger in Asia?
“Yes and no.”
Basically a short answer to a long question but expanding on this, Dr Kongkrapan said the company was not interested in adding to a large overcapacity position; he was more interested in adding value to the current portfolio. But would he buy capacity to improve Emery Oleochemicals’ share without adding to overcapacity? “If the right opportunity presented itself, we would consider it.”
What made PTT Chemical (and its precursors) decide to pursue an oleochemical strategy?
“Several years ago, the group decided that ‘green chemistry’ was a strategy to be pursued alongside its basic petrochemical strategies. There was pressure to do biodiesel but that was considered too limiting on its own in case the economics were not always right. The decision was taken to look at wider involvement and this led, among other things, to the original joint ventures with Cognis (in ethoxylates and fatty alcohol). Getting to know the Cognis people over these joint ventures led to wider discussions and eventually buying their 50% share in Cognis Oleochemicals Malaysia.”
What are the benefits of Sime Darby Plantation and PTT Chemical coming together in an oleochemical JV?
“Both parent companies are strong companies in their own right, with strong ties from their respective governments. We believe that there are several synergies that will result from combining the expertise of Sime Darby Plantation and PTT Chemical with that of Emery Oleochemicals. PTT Chemical has considerable chemical expertise to bring to the joint venture while Sime Darby is number one in palm oil.”
How does Emery Oleochemicals want to develop in the future?
“We wish to focus on long-term stable growth through added value and higher value products. Of course, we need to make sure that our basic oleochemical production is competitive, and there is work to be done in this area, but we want to build our future on using our R&D capability to produce solutions to our customers’ needs, not neccessarily to be the biggest in base oleochemicals. We hope to see more synergies between Emery Oleochemicals’ business and that of our parents. The growth can be both organic and via mergers and acquisitions in appropriate areas. We have the major proportions of our business in North America and Europe, which are large markets, but with static or low growth rates. In these areas we have to comepete smartly so, geographically, we will of course be looking extensively at China, India and Latin America for growth.”
Do you feel, like your base oleochemical competitors, that you need to have large capacity in China to succeed?
“The industry does not need additional capacity in base oleochemicals. If we want to grow in China, we have to differentiate ourselves with added value products.”
Given the increasing dominance of palm oil in the oleochemical business today, how do you see your North American and European tallowbased business?
“We have a good business today based on tallow which is very competitive on price at present. The biggest danger to these businesses is not palm oil itself but the use of tallow in biodiesel. Large-scale diversion of tallow into biodiesel would have a very severe effect.”
How do you want Emery Oleochemicals to be perceived?
“We want to be seen as a leader; to compete on a different basis to other oleochemical companies as a solution provider, with market-driven R&D focus and basic oleo platform.”
Have you made any strategic organisational changes in Emery Oleochemicals?
“Previously, Cognis Oleochemicals Malaysia had global operations but operated primarily on a geographic basis. Now, we have reorganised to be on a product/business area basis. For example, Derek Ng is global head of fatty acids and Azuddin Rahman is global head of specialities. This allows for a much more focused approach to the development of the business; we are already planning a new plastic additives plant in Asia.”
Many in the industry wonder whether after successfully divesting their fatty acid and related businesses to Emery Oleochemicals, Cognis will look at divesting fatty alcohols to Emery?
“Cognis has an alcohol business that is integrated into its product line, PTT Chemical has an alcohol and derivative business and Emery Oleochemicals has an alcohol business. We are all independent”
Focus on added value
Geographically, it has the largest capacity in the developed markets, unlike most of its major palm oil-based competitors (Felda and Emery Oleochemicals are the exceptions). However, its capacity in fatty acids in Asia is small compared with IOI, KLK and Wilmar.
As Dr Kongkrapan comments, there is little point in adding to large over-capacity in oleochemicals just to catch up on size and further burden the market with unnecessary capacity. Whether Dr Kongkrapan’s intention to focus on added value will bring the desired results over time remain to be seen, but it is very encouraging to hear about someone in oleochemicals trying to differentiate themselves through applications R&D.
This had effectively disappeared from the Asian industry as the palm oil producers dominated the market. On the downside, Emery Oleochemicals’ predecessors in the same business – Henkel and Cognis – removed themselves from the same business to pursue higher margin added-value opportunities without being dragged down by the increasing commodity nature of basic oleochemicals. On the upside, there are few outfits in oleochemicals with such a commitment to R&D. !
Alan Brunskill is Oils & Fats International’s oleochemicals correspondent.
http://www.oilsandfatsinternational.com
Back | 