Perth investors and engineers have played a lead role in the establishment of Australia’s newest entrant to the biofuels market, Biodiesel Producers Ltd, which is due to start production in October after completing construction of its plant in northern Vi
Perth investors and engineers have played a lead role in the establishment of Australia’s newest entrant to the biofuels market, Biodiesel Producers Ltd, which is due to start production in October after completing construction of its plant in northern Victoria.
The company will enter a sector that has attracted a lot of hype and substantial government backing, but failed to deliver significant achievements.
Biodiesel Producers was established by industrial chemist Dennis Barron in 2002, but he left the company two years ago when a new board of directors took control.
The new board, led by chairman Curt Leonard and including Perth property developer Jim Harris, has overseen completion of the $40 million-plus plant.
Perth engineering group Lycopodium Ltd was responsible for construction of the plant, which is designed to produce 60 million litres of biodiesel per year.
Like other companies in the sector, Biodiesel Producers has had to deal with major changes over the past year, including federal government excise changes that eroded biodiesel’s competitive advantage.
The sector has also been adversely affected by the fall in crude oil prices from levels reached in 2006, a sharp rise in feedstock costs and technical problems.
Perth company Australian Renewable Fuels Ltd, which commissioned Western Australia’s only major biodiesel plant last year near Bunbury, is currently in the midst of a capital works program designed to improve the reliability and efficiency of its plant.
However, it has received some good news this year. The company has qualified for the balance of a $7.2 million federal government grant and Caltex and earthmoving company Piacentini & Son Pty Ltd have agreed to buy up to 13ML of biodiesel in total.
Piacentini has been using a 20 per cent blend of biodiesel in its diesel fuel since last October and has achieved outstanding operational results, according to AR Fuels.
The biggest problem for some biofuel companies has been the skyrocketing cost of feedstock, which is about 85 per cent of their total cost.
Perth-based Sterling Biofuels Ltd announced last week that it was about to finish construction of its biodiesel plant in Malaysia but would not commence production because the cost of palm oil had nearly doubled, making the plant uneconomic.
Another Perth company, Mission Biofuels Ltd, is aiming to become self-sufficient in feedstock so that it doesn’t run into the same problem.
Natural Fuel Ltd, which operates a plant in Darwin, is forming direct relationships with plantation owners and is exploring growing its own crops.
Biodiesel Producers has tackled the technical risks in its project by using Austrian technology that is currently in use in about a dozen plants.
Its rural location provides a large catchment area for supply of tallow, its main feedstock, and it is close to the Hume Highway, which it believes will help secure sales contracts with trucking companies.
Despite all of the problems facing the sector, the biofuels industry is set for more growth.
Six new or expanded biodiesel plants are due to be commissioned in Australia this year, according to research group Abare, and Biodiesel Producers is evaluating new plants in Australia and New Zealand.
Several new ethanol projects are also under development.
Osborne Park company Grainol Ltd is aiming to build two large ethanol plants producing 400 megalitres, while NSW company Primary Energy Ltd is planning to build an 80ML ethanol plant near Rockingham.
