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Biodegradeable plastics play Leaf Resources is close to launching a new Malaysian refinery after agreeing to buy 100,000 tonnes of palm tree fibre per year to make materials for bio-plastics.

Leaf (ASX:LER) is working on producing sugars from biomass such as banana leaves which could be used to replace petrochemicals used in plastic bags.

Its “Glycell” technology process breaks down plant biomass for the production of renewable sugars that can be used in any plastic.

The company’s first plant has been undergoing development in Johor, and by last November the company had supply agreements in place for raw materials to make biodegradable coatings for paper.

On Friday morning, the company confirmed it had signed a deal with Malaysian biomass operator Biovision and Greenergy to buy  100,000 tonnes a year of “empty fruit bunch fibre” — usually taken from palm trees.

The deal, which has an initial term of 10 years, gives Leaf a key ingredient for the creation of its industrial sugars and refined glycerol products.

The partnership will also see Biovision and Greenergy work with Leaf in setting up the Malaysia plant to work out delivery and storage areas for the fibre.

Leaf Resources (ASX:LER) share price, past 12 months.

Leaf Resources is yet to commercialise its tech. In the March quarter it burned $740,000 with no cash receipts from customers.

At the end of March it had $2.2 million in the bank.

The company’s share price is down 12 per cent over the past 12 months, sitting at 8.3c this week.