Shemberg moving carrageenan plant to Indonesia

Philippines’ largest carrageenan producer Shemberg Corp. is moving to Indonesia as part of a P1.5-billion repositioning to locations that are more abundant with seaweed raw materials.

The prospective plant in Makassar, Indonesia will be the new site for its 7,000 metric ton (MT) capacity semi-refined carrageenan plant. It wiill source cottonii seaweed variety in Makassar which is known to grow this abundant variety.

“We expect Indonesia to produce 200,000 tons (of cottonii seaweed by 2011). Our cottonii production dropped from 150,000 to 80,000 tons. Indonesia is financing its farmers.

They don't have an option, but to plant seaweeds while we have (an option to send our people abroad as) OFWs (overseas Filipino workers)," said Benson U. Dakay, Shemberg president, in a press briefing.

Shemberg is also moving out from its existing 25-hectare carrageenan manufacturing plant in Mandaue City to two other locations – Maasin, Zamboanga and Carmen, also in Cebu.

It will relocate its 2,000 MT gel fresh carrageenan plant to Zamboanga and its 1,000 MT refined iota spinossum to Carmen.

"It will be P500 million for each movement. We need to go where the raw materials are," said Dakay.

Shemberg's plant in Mandaue City has just actually received an environmental award under Nestle's "Greening the Supply Chain Program."

This is for compliance with the Department of Environment and Natural Resources' regulations specifically for wastewater treatment facility efficiency, efficient flue gas scrubbers for coal-fired boilers, energy reduction, water conservation, chemical reduction, solid waste and packaging materials reduction and recycling, and environmental protection (mangrove planting).

However, the company needs to relocate its plant to Indonesia since Indonesia is set to ban seaweed export by 2012.

Indonesia has been the source of the Philippines for cottonii seaweeds since the country's production has declined over the past few years. The country imported around 80,000 MT of cottonii from Indonesia last year.

"It's advisable for us to move a portion of our factory there (because) they will ban export by 2012," he said. It takes around two years to build a carrageenan plant. Cottonii seaweeds are the raw materials for carrageenan which in turn is an input for other food-based products particularly as a binder or extender in meat products, ice cream, and gelatines. Cottonii-carrageenan producers need to keep price competitiveness since this semi-refined product may be substituted with other starch-based inputs.

The company is relocating to Indonesia as soon as it is able to sell its entire 25-hectare plant in Mandaue City as it will finance its relocations from the sale of this property. The 25-hectare plant is in the South Reclamation Project which has already become urbanized. At a P30,000 per square meter prevailing market price, the property will generate P7.5 billion that it can use for the relocations.

The company will also use the proceeds of the property's sale to pay for the retirement of some workers, estimated at around 1,000, that will be displaced from the relocation. Some of the workers may also choose to relocate to Indonesia, Zamboanga, or Carmen. Estimated retirement payment is at P200 million while the company will also allocate P500 million to pay off debts. Source: Manila Bulletin