ABG said Transfield’s expertise in project management, infrastructure, engineering and dealing with government would provide significant benefits as the biofuels company continues to establish itself as Australia’s leading vertically integrated biofuels developer and producer.

Funds from the $17 million agreement have been earmarked for the acquisition of an Australian vegetable oil crushing facility and further investment in the North American biofuels market.

Details of the vegetable oil facility acquisition have not yet been released, although ABG says the purchase will enhance the security of its feedstock supply and ensure the company’s capacity to produce winter-grade biodiesel in commercial volumes.

ABG also announced it would soon release details of two new projects in North America, both of which will be similar in scale to its Narangba project in Queensland.

The Narangba plant is already under construction, with an intended capacity of 160 million tonnes per annum of ABG’s proprietary, high-cetane biodiesel.

ABG chairman Dr John Keniry said Transfield’s strategic involvement with ABG was a “tangible vote of confidence” in the strategy, direction and management of the biofuels company.

Transfield Investments chief executive Dr David Iverach has been invited to become a director of ABG.

Transfield’s stake in ABG will be provided through the issue of new fully paid ordinary shares between April and September 2006, with an option to take up an additional 7,855,855 shares, subject to ABG shareholder approval.

An exclusivity deed between the two companies states that Transfield may not acquire more than a 15% stake in ABG through the purchase of fully paid ordinary shares without written consent.