Jamie Lee, Business Times 18 Jun 08;
ECOWISE Holdings said it expects to acquire or set up joint ventures with regional crop producers and owners over the next one year to generate biomass fuel, as the waste recycler diversifies into the renewable energy business.
EcoWise, which specialises in recycling copper slug collected from homegrown shipyards such as Keppel Corp and Sembcorp Marine, hopes to ramp up its renewable energy production, which makes up 10 per cent of its current business, executive director Teoh Teik Kee said during a corporate briefing yesterday.
It already operates a co-generation (cogen) plant, which is fuelled by biomass such as wood and horticultural waste. Landscape contractors in Singapore pay ecoWise to collect the waste produced.
The cogen plant, started in 2005, generates 15,000 kg of steam and one megawatt of electricity per hour from five tonnes of biomass. The steam and waste heat has also been used to sell ISO tank heating services. ISO tanks are containers that store chemicals requiring slow heating. Future tie-ups with crop producers and owners will extend to building a biomass plant near the plantations at a later time, said Mr Teoh.
Working with crop producers such as rice millers in Thailand, would help to 'lock in the supply', he said, adding that the projects must also guarantee off-take by the buyers and provide an annual internal rate of return of 8 to 10 per cent at the start.
The company gave no investment figure, but Mr Teoh estimated that it could cost at least $20 million to produce 10 megawatt of electricity using processed food waste at a biomass plant. The investment will be funded by internal resources and bank loans, he added. The company has a healthy cash flow of about $10.3 million, according to its half-year financial statement.
'We've been scouting around,' he said. 'The competition will not come from building a power plant but more from whether we are able to secure the supply of raw material to burn.' He added that smaller local players could pose a threat in pushing up prices of the biomass. The firm hopes that the renewable energy business will contribute to half of its revenue in about three years' time.
Analysts whom BT spoke to said the management's strong track record is likely to push ecoWise's diversification plans through, but noted that such plans are unlikely to contribute significantly to earnings in the short-term.
The firm, which has a market value of $71 million, saw its net profit more than double to $6.6 million for its half-year ended April, thanks to an exceptional gain of about $5.1 million from its sale of a 50 per cent stake in its newly-formed unit to Holcim Singapore. Shares of ecoWise fell half a cent to end at 19.5 cents yesterday.
