ABG chief executive and president Len Humphreys told the company’s annual general meeting yesterday that ABG was planning to expand its 40 megalitre per annum biodiesel facility in Berkeley Vale, New South Wales, and expected scoping for the project to be completed within the next year.
The company expects its new 160ML/pa Narangba plant in Queensland to begin commissioning next month, with production scheduled for the third quarter of 2006.
Under an offtake agreement, Southeast Queensland independent fuel wholesaler and retailer Freedom Fuels could take up to 15% of Narangba’s total production for four years at up to 24MLpa.
Additional agreements in the region account for another 40ML/pa, and agreements for similar volumes were already being negotiated.
Australian Renewable Fuels has also signed a major sales agreement. Under the four-year deal, Western Australian fuel distributor Westfuel for up to 45 million litres of biodiesel a year. Using current spot pricing, AR Fuels has valued the deal at $A200 million.
The sales agreement – which includes a guaranteed minimum volume component – will consume the entire production capacity of AR Fuel’s second plant in Picton, WA once it starts operations. The company said the Picton plant was at advanced commissioning stage, and production was expected to start next month.
Westfuel managing director Barry Scott said the ability to offer its client base biodiesel options would provide Westfuel “a further point of distinction to facilitate market penetration”, complementing Westfuel’s growth strategy.
This is the second major agreement signed by AR Fuels in as many months. A $A250 million sales agreement with South Australian fuel distributor Dermody Petroleum announced was on March 23.
AR Fuels managing director Darryl Butcher said the company was well advanced in its plan to roll out five plants across Australia, with sales agreements covering the full production capacity for its first two plants already secured.
ABG also plans to roll out more biorefineries. In a bid to supply customers across the eastern seaboard, Humphreys said the company aimed to complete a feasibility study for a Victorian production facility over the next year.
ABG has already established distribution terminals in Brisbane, Melbourne and Port Botany, Sydney, in addition to the Berkeley Vale site, and Humphreys said the company was pursuing additional delivery mechanisms by facilitating on-site blending and storage solutions for fleet operators.
Internationally, Canada’s Calgary Biodiesel Centre has licensed ABG’s patented technology for processing high-cetane biodiesel from tallow and vegetable oils for $A8 million. Humphreys told shareholders ABG was helping to progress development at the site.
The company also hopes to conclude another two licensing agreements in the United States over the next 12 months, and Humphreys said further opportunities in North America were also being investigated, as the company aims to use its technology to capitalise on President Bush’s energy independence agenda.
To further these goals, ABG was examining options for acquiring equity in new North American projects, according to Humphreys.
In other international news, ABG has established a new business unit to manage its feedstock supply operations, and is negotiating the rights to an offshore oil tree plantation for non-edible energy crops jatropha and pongamia, and several other feedstock opportunities in the South Pacific, subject to assessments of regional political stability.
ABG restated its prospectus forecast of a $A8.17 million profit for full-year 2006, although the underlying revenue mix could change.
