ARF shares first traded at $1, the same as the issue price, at 1300 (AEST). But they closed at 96 cents.
The Perth-based company - a spinoff from oil and gas outfit Amadeus Energy - has issued 44 million shares at $1 per share, including an initial public offering of 20 million shares.
Made from renewable resources like animal fats, vegetable fats and used cooking oils, biodiesel is cleaner burning than normal diesel fuel.
ARF plans to become Australia's first major producer of biodiesel, selling the fuel both in Europe and in the emerging Australian market. It says the world biodiesel market is currently about three billion litres a year and rapidly growing.
ARF has already begun constructing two plants, one in Adelaide and one in Picton in Western Australia.
ARF says its plants will use proven technology from Austrian company Energea and will each have the capacity to produce 44.4 million litres of biodiesel per annum.
