Subiaco-based Natural Fuel Ltd has appointed three new directors and implemented an asset optimisation strategy over its Singapore plant, seeking to secure interim revenues while unfavourable market conditions remain, the company has announced.
Subiaco-based Natural Fuel Ltd has appointed three new directors and implemented an asset optimisation strategy over its Singapore plant, seeking to secure interim revenues while unfavourable market conditions remain, the company has announced.
The company lost its chairman, former Liberal leader John Hewson, and two directors in October,after releasing an annual report showing a net loss of $47.8 million.
The full text of a company announcement is pasted below
- Asset Optimisation Strategy underway
- Glycerine refining to begin at Singapore in January 2008
- 3 new non-executive Directors appointed
- AGM Webcast on 28 November 2007
Natural Fuel Limited (NFL) is pleased to provide a progress and activity update on its Singapore and Darwin facilities and the current implementation of its Asset Optimisation Strategy, as outlined in the recent quarterly report.
Singapore
The Singapore biodiesel facility on Jurong Island is made up of three separate processing plants - known as trains. Each train contains a biodiesel processing unit and an independent, switchable glycerine refining unit. Singapore is one of few biodiesel plants with independent glycerine refining capabilities. Each train is capable of producing 200,000 metric tonnes per annum (mta) of biodiesel and can co-produce or independently refine 20,000 mta of pharmaceutical-grade glycerine.
The current unfavourable market conditions, including record high feedstock prices, have badly impacted the economics of biodiesel production for NFL and producers across the global industry. Many biodiesel producers have temporarily closed their facilities or are operating on a 'care and maintenance' basis. To combat these conditions, NFL has implemented a Risk Reduction Strategy at Singapore, which includes:
- Maximising asset utilisation to secure interim revenues
- Significantly reducing fixed costs on an operational and corporate level
- Fast tracking access to lower cost alternative feedstocks - including jatropha
Asset Optimisation - Glycerine Refining
NFL's ability to purchase and refine low-value crude glycerine to produce high-value refined, pharmaceutical grade glycerine is a valuable strategic advantage that will create interim revenues to assist in covering fixed costs while feedstock prices remain high.
Pharmaceutical grade glycerine is currently selling at up to US$1450 per metric tonne FOB South East Asia and is in high demand for use in the plastics, electronics, cosmetic and pharmaceutical industries. NFL is able to purchase the required crude glycerine through its extensive industry network. The Company is currently negotiating with a number of buyers who have expressed strong interest in long term supply of refined glycerine.
Current Status
Construction of Singapore's three glycerine refining units has been accelerated ahead of the original schedule to allow glycerine refining to begin as soon as possible. The table below outlines current expected startup dates for each train.
Train 1 Glycerine Unit 1 in production January 2008
Biodiesel Unit 1 production-ready January 2008
Train 2 Glycerine Unit 2 in production February 2008
Biodiesel Unit 2 production-ready March 2008
Train 3 Glycerine Unit 3 in production March 2008
Biodiesel Unit 3 production-ready April 2008
Production
Singapore's Glycerine Units 1, 2 and 3 have been fast-tracked and production of pharmaceutical grade glycerine is expected to begin in January 2008 at Glycerine Unit 1, followed by Unit 2 and Unit 3.
Biodiesel Unit 1 (Train 1) will be commissioned to a full production rate through performance tests and will then be run at appropriate productions levels, depending on economic conditions, including feedstock pricing.
Biodiesel Unit 2 (Train 2) and Biodiesel Unit 3 (Train 3) will be brought up to production-ready status, but will not begin production until feedstock prices drop to within economically viable levels.
Darwin
The Darwin Biodiesel Facility is owned and operated by Natural Fuels Australia Ltd (NFAL), which is a 50/50 joint venture between Natural Fuel Ltd and Babcock & Brown Environmental Investments (BEI).
Following the installation of a trial centrifuge in July 2007, production of biodiesel to full specification was conducted during August and September at a reduced rate. This initial production enabled NFAL to export 8.8 million litres (or 7,700 metric tonnes) of biodiesel from Darwin in August - Australia's first ever shipment.
NFAL has experienced a number of delays and technical issues while commissioning the Darwin plant. In particular there have been issues surrounding the delivery, testing and installation of the permanent centrifuge, which separates biodiesel from impurities.
Once successfully installed, it is expected that the permanent centrifuge will allow production of on-spec biodiesel and the plant will then be run at appropriate productions levels, depending on economic conditions.
Asset Optimisation - Glycerine Refining
As at NFL's Singapore facility, the NFAL Darwin plant is also capable of producing refined, pharmaceutical grade glycerine, independent of biodiesel production.
Production of refined glycerine at Darwin has occurred to better than target specifications (99.5%) and at the better than nameplate rate of 12,000 mta. Production of refined glycerine is not dependent on the installation of the permanent centrifuge or the current unfavourable biodiesel market conditions. Therefore, NFAL is implementing a glycerine refining strategy for the production of pharmaceutical grade glycerine at Darwin.
Although it is difficult to predict when the current unfavourable market conditions will improve, once commissioning of the permanent centrifuge is completed, it is intended that biodiesel production will re-commence at appropriate levels, once feedstock prices lower and market dynamics recover.
Appointment of New Directors
Natural Fuel is pleased to announce the appointment of three (3) non-executive directors to the Board who have proven and significant industry experience. The Board's Nomination Committee considered a range of candidates for appointment as nonexecutive directors. The Committee was focused on selecting candidates who demonstrate the key skills and expertise that will add value to NFL's forward strategy.
Martin Kirwan - Non Executive Director
Mr Kirwan has extensive petrochemical industry experience having worked for the BP Group for 30 years. Mr Kirwan was the inaugural Managing Director of Southern Oil Refineries taking the business from a green field to a fully operational facility manufacturing re-refined base oils from used oil. Mr Kirwan also served as Director of the Federal Government's Oil Stewardship Advisory Council and is currently owner and CEO of Enviro Oil Co of Australia Pty Ltd.
Michael Coote - Non Executive Director
Mr Coote is the founding Director and CEO of Coote Industrial Limited which listed on the ASX in 2006. Mr Coote was involved in heavy mining equipment, waste crushing, conveying projects and locomotive maintenance for Mt Newman Mining (BHP), and founded Globe Turbocharger Specialties Australia (GTSA). GTSA was re-branded as GTSA Engineering which later evolved into the publicly listed Coote Industrial Ltd.
Robert Rooke- Non Executive Director
Mr Rooke is a Foundation Fellow of the Australian Institute of Company Directors and is currently a director of Centrepoint Finance WA Pty Ltd, Proffessus Limited (Professionals Real Estate Group), African Strategic Minerals Limited and Operation Rainbow Limited. Mr Rooke has served on a diverse range of public company boards in the automotive, medical products and mining sectors and is a partner in a financial consulting business that provides services for an international oil & gas company.
