Malaysia has signed a deal to swap environmentally ruinous palm oil for Chinese weapons.

Malaysian industrial minister Teresa Kok said US$145 million worth of palm oil, or about 200,000 tonnes, would be exported to China in exchange for construction services, natural resources and defence equipment.

Malaysia has been trying to cut its palm oil stockpile, which peaked in December, in a bid to shore up prices.

“I hope this cooperation will further promote palm oil trade between Malaysia and China,” said Kok, after the signing of a deal with China Poky Group Corporation, the largest Chinese state-owned arms manufacturer. It also purportedly specialises in building construction.

Palm oil cultivation causes deforestation and its use in transport fuel should be phased out, the European Commission reported in February, although it granted some exemptions for smallholdings or on unused land.

Instead, Kok is promoting palm oil in Beijing, Hangzhou and Guangzhou as the European Union increasingly looks to shun the product.

In April, China agreed to buy a further 1.9 million tonnes of palm oil from Malaysia over the next five years and invest upwards of US$477 million in a biojet fuel refinery.

“With 100 years of experience in developing the palm oil industry, Malaysia has made efforts to ensure that our palm oil is the best in the world, be it in quality, productivity and innovation,” the minister told the Chinese media.

China is Malaysia’s third-largest buyer of palm oil.

French oil major Total is set to start up a biodiesel refinery using palm oil, despite opposition from European vegetable oil growers and environmental activists.

The refinery in La Mede in southern France would begin production in June, said CEO Patrick Pouyanne.

The operation of the 500,000 tonne-per-year refinery has been delayed several times by protests from farmers and environmentalists.

Total has spent around €200 million to convert the loss-making crude oil refinery to biodiesel. The oil and gas giant said it hoped France ditched its plan to end subsidies for producers adding palm oil to diesel.

“We can have a refinery that is competitive,” Pouyanne said. “If the French law is not changed, La Mede will not be competitive with its European peers.”

Total has committed to using less than 300,000 tonnes of crude palm oil per year at La Mede out of a total of 650,000 tonnes. The rest of the oil would come from other plants, recycled animal fat and cooking and industrial oils.

Palm oil causes deforestation, extinction and pollution. Picture credit: PXHere