The biodiesel outfit has signed a 50:50 joint venture agreement, worth up to $US100 million ($A133 million), with Boston-based ArcLight Capital Partners. The deal may lead to the co-funding, construction and operation of three biodiesel production facilities – two in the United States and one in Canada – with each plant expected to produce up to 160 million litres per annum.
ABG will contribute up to $50 million to the JV to fund approved project development, construction, working capital and licensing fees.
“Proposals for one Canadian and one US plant are well advanced, with options for the second US site under assessment,” chief executive Len Humphreys said.
“The Canadian project will be developed near Calgary, Alberta in western Canada, and will absorb the smaller-scale project previously announced by ABG for that region.”
Humphreys said the total diesel consumption in the US during 2003 was about 225 billion litres, with biodiesel consumption expected to reach at least 1 billion litres by 2009. The US National Biodiesel Board estimates that 500 major fleets, serviced by 1400 distributors and 450 retailers, already use the fuel.
Back in Australia, ABG has blamed new fuel tax laws and current sales trends for the reason it has downwardly revised forecast biodiesel sales for the full year from 63.8 million litres to 29.7 million litres.
ABG’s sales for the first-half of 2006 were 6.13 million litres – produced entirely at the Berkeley Vale biodiesel plant in New South Wales.
The company said production costs at the facility were higher than expected during the period due to the increase cost of the methanol and canola feedstocks, in addition to the detection of unexpected feedstock contaminants, performance problems with the site’s waste-water treatment plant, and additional storage and transportation costs.
With the ramp up of production at the company’s Narangba facility in Queensland, the Berkeley Vale site has been shut down for two weeks so that the problems can be fixed.
As a result of the lower production, ABG expects to post reduced profit and revenue results for the 2006 year. In its 2005 prospectus, ABG forecast a net profit after tax for the period of $8.17 million. Now it expects its earnings before interest and tax (EBIT) to reach just $900,000.
