Japan: Taiheiyo Cement to set up subsidiary for biomass plant

Taiheiyo Cement will spend JPY23.5bn (US$224m) to set up a biomass power plant at a cement production site in Ofunato, Iwate prefecture, Japan. An electricity-wholesaling subsidiary with a capitalisation of JPY4bn will be created this August to undertake the project, reports Nikkei Asian review.

The 75,000kW facility will be fed with palm kernel shells and empty fruit bunches left over from palm oil production and will begin operation in the autumn of 2019. All output will be sold to eRex, a power company that counts Taiheiyo Cement as a major shareholder, with pricing based on the government's feed-in-tariff programme. Taiheiyo Cement plans about JPY100bn in growth investments over the three years ending fiscal 2017.

While cement demand is expected to get a boost from the 2020 Tokyo Olympics, the outlook after that is uncertain. So the company seeks to cultivate the biomass power business into a steady source of earnings, expecting around JPY11bn in annual sales.