Australian Biofuels, which is a wholly-owned subsidiary of construction outfit Multiplex, said it hopes to issue a prospectus next month seeking an initial $3.5 million, through an offer underwritten by Multiplex, to help it advance plans to build and operate five ethanol plants across Australia at a capital cost of between $300 million and $350 million.

Further funds will be sought provided government support for the industry's development is gained.

Australian Biofuels managing director Trevor Bourne said ethanol had a significant role in helping fulfil Australia's transport requirements, being a clean-burning, environmentally friendly, renewable fuel sourced from crops including sugar cane and wheat.

"It is an industry which can fulfil a number of needs, but basically what we're saying is the government needs to mandate its use, put in place ethanol blend standards and adopt a view on imports," Mr Bourne said.

Currently, existing and potential ethanol producers are lobbying the Federal Government to encourage ethanol use in fuel, a move supported by the Australian rural sector. Economists estimate that the emerging ethanol industry is worth some $1.8 billion.