Getting the best quality oil from a refinery
Mahbob Abdullah 
Muhammad Mohan says plantations, mills and refineries must work together to produce the best quality oil

When I was running a palm oil refinery in Pasir Gudang many years ago, I met Dr Muhammad Mohan for the first time and he was on his way to start a new refinery for Sime Darby by the bank of the Red Sea at a place called Adabiya in Egypt. We have worked closely for many years, and since then we have done a number of consultancies together. He had started as a mill engineer, the second generation working for Sime, a point his father, a hospital assistant, and he are extremely proud of.

But it has been a year since we last worked together on an assignment, while he has been busy providing advice to a number of clients. It was good to see him again this time on stage at a recent seminar conducted by the Palm Oil Refiners Association, and Muhammad Mohan was able to give an account of how a refinery should work well.

In Pasir Gudang, we have clearly the biggest concentration of refineries in one place, and because most of the plants are quite old, including Kempas Edible Oil, when I was there I had a tough time trying to make a profit.

It is not often that a planter is asked to run a refinery, and it can be said that the work is different. Whereas running a plantation is getting the maximum crop, and at the best quality, the duty ends when the crop goes to the mill. The mill manager takes over, and he maximises the extraction rate, and sends the crude palm oil (CPO) to the refinery. There the process starts to turn it into refined oil, including olein which is the cooking oil in your kitchen. The quality must be the best that can be offered to buyers, with the clarity of the oil in the bottle good enough to make the housewife reach for it.

The CPO is red in colour, and to make it a clear golden liquid that you see displayed in the supermarket, it is treated firstly by taking the gums out, and then bleached with bleaching earth, put through a deodoriser, a towering vessel that takes out the impurities.

The process is enough if we were to sell the oil for shortening that is used for making bread, but for cooking oil, the process goes on to fractionate, that involves cooling, and the oil is then pressed to separate the solids that are called stearin, which is good for animal feed, and for making oleochemicals and cosmetics.

The olein can get fractionated to a higher level with lower stearin content and becomes more clear. It would not cloud so readily in cold weather, and it is also used for tailor-made products that manufacturers look for. But from the whole process there is much use of power through pumps and motors, and cooling towers, so a refinery has to see how the power can be saved. Usually it goes on in an unending improvement of machines so that there is some margin to be had. Refiners will try to make more margins by working on tailor-made products to suit buyers’ needs, for biscuits, coating fats and chocolates.

These buyers can come from afar, Japan, China, and Switzerland or Syria and Lebanon. They include factory owners, and senior buyers who look around for any infringement on safety standards or cleanliness, and you could lose a sale if they see anything wrong. Even when the products are acceptable, there are always competitors who would want to take the business away. They can cut down on price when they have the scale to bring the costs down.

That is why when talking to the buyers you tend to ask what else they would need, such as coating fats or cocoa butter substitutes or equivalents, which you can make from palm kernel oil, and therefore you will have a one-stop arrangement for the customer.

It is mostly a matter of working in the laboratory to get the best formulation. It is also to find the flavours preferred by local buyers. Preferences can be different and that was how in Egypt, Muhammad Mohan had managed to get good sales after teaming with Savola, a Saudi food company, which had got the flavour for ghee most favoured by Egyptian housewives.

For the foreign markets, Malaysia and Indonesia are the leaders of course, and competition is always keen and sometimes the situation is a bit one-sided when one country favours the refineries which get a subsidy, and therefore can undercut the price. However, each refinery has its own customers, trusted over the years for regular and dependable payments. It is always a battle to make sure that the plant runs on full utilisation. For the marketing team it is a constant challenge.

In the course of his work, Muhammad Mohan had also tried to improve the service by travelling to the buyers’ factories, and follow up on issues about quality or specifications. He had done it by going to Lebanon, Syria, and Tunisia apart from other countries. This is unlike running a mill, where such opportunities are not available. I must say it was a time when peace reigned in those countries, unlike now when cement and steel are exposed like wounds on the building walls.

There are other hazards in the business of refineries, because one deals in large volumes, and therefore exposure on any of the by-products such as stearin or fatty acids can lead to an unpleasant situation, if the market drops overnight.

So despite all the hard work, the refinery can be incurring a loss. Similarly, if the exchange rate works against you, and you are not covered adequately, it will pose another problem.

At the close of his paper, Muhammad Mohan gave a cry from the heart, saying that here is an urgent need for plantations and mills to work together with the refineries, so that their oil quality is nothing but the best. It means the free fatty acids have to improve, as well as the DOBI level, which means oxidation is at a minimum, all of which can add to making quality products for the manufacturers.

It can only happen if the quality of fresh fruit bunches is improved from the practices in the field, without long harvesting rounds. Over-ripe fruit can lead to inferior quality oil and allows more arguments from the lobbies against palm oil.

For the improvements to happen, the specifications for the oil that leaves the mill should be raised. But from current showing it is not likely to happen, except for certain well-managed companies which can raise quality and fetch a premium for their oil,

However, that does not stop Muhammad Mohan from repeating his message, and hopefully the day will come as we are pressed with more competition, the quality of the fruit will be better. There should be more collaboration among plantations, millers and refiners, and each should not be thinking or behaving like they are in silos.

Mahbob Abdullah is a former planter. Comments:

This article first appeared in Focus Malaysia Issue 263.