The state's current gas crisis is proving to be a boon for West Perth-based biodiesel company Australian Renewable Fuels Ltd, which today received a purchase order for the immediate supply of 500,000 litres of biodiesel.
The state's current gas crisis is proving to be a boon for West Perth-based biodiesel company Australian Renewable Fuels Ltd, which today received a purchase order for the immediate supply of 500,000 litres of biodiesel.
The company said the order was received from a prominent Western Australian company, and expects it to be followed by another similar size order in the coming weeks.
Gas supplies in the state have been cut by a third following a fire at Apache Energy's Varanus gas facility last week.
ARF's latest order comes in the wake of another agreement where the company will provide up to seven million tones of biodiesel to a WA resources company, almost five months after it put both its Picton and South Australian plants on care and maintenance.
Below is a copy of the full statement.
Australian Renewable Fuels Limited wishes to update the market on the current status of its biodiesel production operations at its sites in Largs Bay, South Australia and Picton, Western Australia.
On 18 April 2008, ARF informed the market that it had concluded a Purchase Term Sheet with a prominent West Australian resource company for the supply of biodiesel. The proposed supply agreement is reliant upon either ARF
or the customer procuring funding for a blending infrastructure and storage facility at the customer's mine site for ARF supplied biodiesel.
ARF is pleased to announce that the draft supply contract and draft infrastructure funding agreement are presently being considered by the prospective customer. Once approval has been obtained, finance will be sought from our company's bankers for the capital works associated with the project. ARF remains fairly optimistic that it will be successful in securing the bank finance thereby triggering related supply and logistical activities.
Production of biodiesel on a limited scale has recommenced at our company's Picton site. At present we are producing biodiesel on a toll processing basis for a WA mining company. The annual estimated throughput for this customer is expected to be 1.5 million to 2 million litres of B100. We are currently re-negotiating supply arrangements with our customer base as it existed prior to the cessation of production late last year.
ARF (Picton) has today received a purchase order from a prominent West Australian company for the supply of 500,000 litres of B100 to commence immediately. This order emanates from the recent disruption to gas supplies
in WA and ARF expects that it will be followed by a similar size order during the ensuing weeks. ARF is endeavouring to have biodiesel incorporated into that customer's ongoing day to day operations.
While production at Picton is still on a "demand" basis, the ARF Largs Bay plant (SA) remains under care and maintenance. ARF (Adelaide) is actively engaged in negotiating significant off-take arrangements with fuel distributors in South Australia and hopes to announce a break-through in this regard
shortly.
The recent substantial increases in diesel prices in Australia have greatly alleviated the risks and exposures associated with high feedstock prices in biodiesel production. Sales contract negotiations currently underway indicate that commercially acceptable margins may once again be available to biodiesel producers and ARF seeks to capitalise on these returns for the benefit of its shareholders.
