Axiom plans to produce low-sulphur diesel from waste plastics, as well as biodiesel from plant oils and animal fats, and intends to become the biggest biodiesel producer on Australia's eastern seaboard.

It will build two low-sulphur diesel plants at a total cost of A$17.6 million, A$2.44 million of which will be paid by the issue of 3.05 million shares in the company. The facilities are expected to begin production in July next year, and reach full capacity of 11.7 million litres per annum in September 2006.

The plants will be built at Axiom’s Laverton site in Melbourne under an exclusive licence of technology from Ozmotech. The technology is currently being used in Japan to produce diesel fuel for cogeneration purposes. Axiom is planning to build up to another 13 plants in Australia and New Zealand over the next five years.

Axiom says only 125 of the 1.5 million tonnes of plastic used in Australia every year is being recycled. It has an exclusive agreement with Visy Steel Products to develop a network to source, sort and process its waste plastic currently going into landfill.

The Laverton plant, which will be upgraded once it is acquired from the Victor Smorgan Group, will process the plastics and the raw material for biodiesel.

As part of the consideration for this acquisition, the Victor Smorgon Group will receive a A$4 million cash payment and will be issued about 15.1 million Axiom shares under the prospectus, thereby becoming a significant Axiom shareholder.

This plant will be upgraded at a cost of A$10.1 million to a planned capacity of 100 million litres of Biodiesel per annum. Axiom expects the plant to reach its forecast production rate of 80 million litres per annum by October 2006.

Raw materials, including a range of vegetable oils and animal fats, have been contracted with major suppliers in the industry and the plant will be able to vary the composition of raw materials to take advantage of price differentials in the market without compromising quality, the company claims.

Axiom will also have its own used cooking oil collection business from which to source raw materials.

Petro-chemical distributor Emogin will distribute the low-sulphur diesel and biodiesel in Australia.

The company said it would produce profits after commissioning both low-sulphur diesel and biodiesel plants in July 2006.

Revenue of A$70.1 million and net profit of A$10.1 million is forecast for fiscal 2007.