KUALA LUMPUR (April 8): BTM Resources Bhd announced today that its unit BTM Biomass Products Sdn Bhd is partnering MC Bio Sdn Bhd and two other South Korean companies to set up a wood pellet manufacturing plant in Terengganu, Malaysia.

The group said in a filing on Bursa Malaysia today that a memorandum of understanding (MoU) was signed with MC Bio, Korea South-east Power Co Ltd (KOEN) and MOKPO City Gas Co Ltd last Monday (April 1).

KOEN is a subsidiary of Korea Electric Power Corp (KEPCO) and is involved in electricity generation and development of electric power resources, while MOKPO City Gas Co Ltd is involved in the manufacturing of gas, distributing gaseous fuel through mains, as well as in hydroelectric power generation.

Meanwhile, MC Bio, based in Selangor, is involved in the manufacturing and processing of wood pellet.

Under the MoU, which is valid for a period of two years with an option to extend it by a further six months, all three parties will invest in the project and develop it as shareholders.

Additionally, BTM will procure raw materials for the project, while MC Bio will produce the product with specifications that will meet KOEN’s requirements.

Meanwhile, MOKPO will guarantee the agreed quantity and quality of pellets and deliver them to KOEN, which will off-take the products.

According to BTM Resources, the collaboration will serve as a platform for the group to expand its wood pellet business, help diversify its income stream, and contribute to the group’s profitability in the future.

The MoU is not expected to have any material effect on the net assets, earnings and gearing of the company for the financial year ending Dec 31, 2019 (FY19).

Shares in BTM Resources settled unchanged at 11 sen today, valuing the market capitalisation of the thinly-traded stock at RM15.55 million.