Looking for PKS Supply from Indonesia

Palm Oil Mill

With the number of palm oil mills estimated to reach more than 1,000 units with 12 million hectares of palm oil plantations and more than 40 million tons / year of CPO, the potential of the PKS (palm kernel shell) produced reaches 15 million tons / year. With properties almost similar to wood pellets and prices are much cheaper, PKS is a prime of biomass fuel. But with the location of palm oil mills located mostly very remote and PKS still considered a waste for palm oil mills, often getting PKS supply is not easy. Infrastructure factors and the distance from export ports are often obstacles. This makes some palm oil mills only dispose of or stockpile PKS in locations around their mills. For palm oil mills that have the main business of palm oil or CPO, there are still many palm oil mills lacking attention to PKS as an additional source of income.

PKS Stockpile

Japan in particular is the largest PKS consumer, followed by Korea and several European countries. Their needs are estimated to be up to millions of tons every year. PKS exports to Japan and Korea are easier and often done because the distance is relatively close compared to Europe. PKS exports to Japan and Korea are usually quite economical with a volume of 10,000 tons per shipment while for Europe with a longer distance so in order to remain economical the shipping volume must be quite large, for example more than 25,000 tons per shipment. It is predicted that in 2021 or 2022 the needs of Japanese PKS will increase rapidly and then be relatively stable for the next 20 years. This is because biomass power plants can be said to be fully operational that year. The original plan for 2019 is that the biomass power plants can operate, but because of a number of obstacles, it will be delayed until 2021 or 2022. For more details about the delay in the construction of power plants in Japan, please read here.

The PKS comes from a palm oil mill and is collected somewhere to reach a certain volume so it is ready to be shipped. In order to be accepted by the power plant, PKS is cleaned from a number of impurities and dried until the water content is below 20%. Cleaning of the impurity is done by means of a sieve and drying is carried out only with the sun light or aerated. In addition to being able to maintain the cleanliness and dryness of PKS, especially in the rainy season, buildings such as large warehouses and concrete floors are needed. Even not a few PKS buyers from Japan require large warehouse buildings with concrete floors so that the quality of PKS can be maintained.

Typical Biomass CFB Powerplant in Japan

Fluidized bed combustion technology for electricity generation is widely used in Japan. With the circulating fluidized bed combustion technology, PKS can be used as fuel, even biomass pellets from agricultural waste can also be used for this technology. Fluidized bed combustion technology with lower operating temperatures than pulverized combustion makes it more tolerant of various types of fuel. It also means EFB pellets (empty fruit bunch pellets), and wood pellets from energy plantations can be used for fluidized bed combustion fuels.

Biomass power plants that rely on PKS for a period of 20 years certainly pay close attention to the continuity of PKS supply in that range. Anything that can interfere with the supply of PKS both in the short and long term will seriously concern them. As an example of the use of domestic PKS there is also an increasing tendency which could be an increase in the use of biomass as fuel or other sectors such as the production of activated carbon from PKS. In these conditions, of course they will make calculations regarding PKS supply and PKS exporter. The palm oil plantation extensification program will also increasingly supply PKS on the other hand because the palm oil mill will process FFB  (fresh fruit bunch) from the plantation and produce PKS as waste or by-products.

PKS Loading into Mother Vessel for Export Market

PKS players or exporters now generally have contracts with Japanese buyers both for spot trading and even for longer contracts. And not a few of the exporters have run out of PKS quota / supply for new buyers. In such conditions a new buyer must be able to find another PKS supplier / exporter. New suppliers may not have export experience and do not even have a number of facilities to process PKS, but only have a network with a number of palm oil mills as PKS sources or producers. This condition makes the PKS export unable to be carried out directly, but requires a number of preparations from both parties. Considering there are still more than 1-3 years from now on, both parties can prepare the business from now on, so that the long-term business can be carried out and as expected.

Surplus Conditions, Why Import? Does Not Make Sense!!!

It is common practice that a country always protects its domestic products. Developing and increasing the quality and quantity of domestic products is one of the country's responsibilities in the economic field. It is strange and implausible when a country has a surplus of certain products, but on the other hand it imports similar products. This, of course, besides damaging the economy also directly affects the producers. The easiest example is in food or agricultural products. As an agricultural country producing rice when the surplus is clear, there is no need to import. Rice produced by farmers is not bought as well as sugar cane and so on, if at the same time a surplus such as a harvest is imported similar products. This is an economic murder for these farmers.

When the market goes increasingly liberal, the chances of cheating are also getting bigger. It could be that a country makes a hoax that discredits certain state products to protect the country's products. Especially if this is done by a large influential country. Of course this has a negative impact on the target country products so that the product does not sell well in the market or at a minimum the price falls. The evil trade politics are mostly done to bring down business opponents. Such efforts should not be carried out, but can use other better methods such as providing incentives for producers or users of domestic products. This further encourages the use of domestic products and revives the country's economy without harming other countries.

Recently Korea made a slight revision of the use of wood pellet fuels. Wood pellets produced from within the country are prioritized over imported products. This has encouraged the growth of the wood pellet industry in the country. With the large amount of wood pellet needs, it is very likely that the country will still not be able to meet its needs due to the lack of raw materials related to its natural factors. This is how it keeps them imported. But with this policy, Korea has taken sides with its domestic industry. As more and more countries in the world use wood pellets, wood pellet producers can also choose buyers at the best prices.

Tips for Choosing PKS

For the CPO producers, tenera is preferred because the thick coir (mesocarp fiber) will produce more CPO. Whereas for PKS (palm kernel shell) users such as power plants and a number of industries, the type of dura palm oil is preferred. PKS tenera has a thin shell (0.5-4 mm) so that the calorific value tends to be lower than the dura with a thicker shell (2-8 mm). Old palm oil plantations usually use tenera types to maximize CPO yield, while old palm oil plantations usually use a type of dura. PKS as a byproduct or one of the solid wastes in a CPO mill is actually not a major concern for palm oil mills, and CPO is clearly the main focus. PKS is primarily a concern of traders and users, so quality factors emerge as a consequence of buying and selling transactions.

Indonesia has around 12 million hectares of palm oil plantations at present, consisting of 4.8 million hectares of smallholder plantations, 6.2 million hectares of private plantations and 0.8 million hectares of state plantations. There are still many regions in Indonesia that use the type of dura on their palm oil plantations. Smallholder palm oil or community palm oil plantations are one of the many that produce this type of dura palm. When PKS demand increases sharply as it is today, especially for export markets to Japan and Korea (more information read here), then PKS dura types are the first choice. In practice it is difficult to find PKS that is 100% dura because the source of palm oil fruits used in CPO production also comes from various sources. The source of the nucleus (company plantation) can be the majority in the form of tenera, while palm oil from community plantations can be the majority of the dura. The composition of the dura and tenera also varies depending on composition the nucleus and plasma plantations. For example, a CPO mill with a nucleus plantation which is majority still new plants so that the palm oil fruit majority comes from the community plantation. Or it could be that the nucleus plantation has entered the replanting phase so that supply is limited and relies on community plantations and so on.

According to botany, dura-type plants have dominant alela homosigot (sh + sh +) so produce thick shells. Whereas hybrids from dura with pisifera, which are tenera-type plants that have alela heterosigot (sh + sh-) have thin shells and are surrounded by fiber rings in the mesocarp. Pisifera type plants themselves have recessive alela homosigot (sh-sh-) so they do not form shells. Generally this type of pisifera is not used as a commercial for palm oil plantations because it fails to form fruit. But indeed there are several types of pisifera that are still fertile and capable of reproducing. Dura type plants can also be said to be parent plants because the tenera type is a crossing of dura and pisifera.