Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 11): Oil and gas player Dialog Group Bhd is setting up a special purpose vehicle with its partner, Nilai-based recycling and manufacturing company Diyou Fibre (M) Sdn Bhd, for its venture into the post-consumer plastics recycling business, the group's first investment in the downstream petrochemicals business and renewable business.

In a bourse filing, Dialog said its has on Thursday (Nov 11), via its unit Dialog Chemicals Sdn Bhd, inked a shareholders’ agreement with Diyou Fibre to form the SPV, which will build, own and operate a food-grade recycled polyethylene terephthalate pellets (recycled PET) production facility.

This follows the signing of a Memorandum of Understanding between Dialog and Diyou in August, which paved the way for this shareholders' agreement. Dialog, through Dialog Chemicals, will hold a 51% stake in the SPV, while the remainder will be held by Diyou Fibre.

The SPV will sell food-grade recycled PET to food and beverages customers, Dialog said. “The total investment outlay, after completion of the project evaluation, is estimated to be approximately US$20 million," Dialog said, adding that it expects to use internal funds and/or borrowings to finance the investment.

Diyou Fibre, according to Dialog, is one of the largest mechanical recycling manufacturers, where post-consumer plastics are recycled and made into materials used for polyester staple fibre, food and beverage packaging, industrial packing, construction, automotive, and other raw materials in various industries. The founders have more than 30 years of experience in the post-consumer plastics recycling industry.

“The proposed venture will serve to meet the increasing demand for food-grade recycled PET materials resulting from the drive by the international community to support a circular economy. The recycling of plastic wastes into feedstocks for the production of packaging materials for the food and beverage industry undertaken by this SPV further supports Dialog’s initiatives and contribution towards making a positive impact towards the environment, as well as supports the Malaysian government’s initiatives in sustainability as stated in the circular economy road map,” said the group.

This venture is also in line with its long-term climate goal of achieving Net Zero Carbon emission by 2050, Dialog said.

“Currently, Dialog has invested in a start-up company which has developed and continues to develop proprietary technology to capture carbon and utilise the carbon in the production of fuels and chemicals, which will result in the reduction of greenhouse gas emissions. Dialog remains committed to its core values and key strategies of a sustainable business by capturing opportunities and mitigating risks through its diversified portfolio,” it added.

Dialog’s shares settled unchanged at RM2.88 on Thursday, bringing a market capitalisation of RM16.26 billion. Year-to-date, the counter has fallen 17%.

Edited ByTan Choe Choe
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