BIOFUELS

Biofuel déjà vu

STERLING Biofuels has announced plans to join the boards of the Australian Stock Exchange, with a...

Biofuel déjà vu

The ASX hopeful plans to raise $A35 million via an initial public offering to fund construction of a 100,000 tonne per annum biodiesel plant in Malaysia, scheduled to start-up in the middle of next year.

Sterling’s business model echoes that of Perth-based Mission Biofuels, which made a strong debut on the ASX in early April.

Mission originally planned to build a 100,000tpa biofuels facility, also in Malaysia, but has since received government approval to increase this by a further 20,000t.

Another Australian company, Jupiter Energy, was until mid-2005 known as West Coast Mining. In June last year, it changed its name and focus to become an energy company. Following a lack of success in its Victorian oil and gas operations, undertaken in partnership with Lakes Oil, Jupiter has moved into the Malaysian diesel-from-palm oil sector.

The Malaysian Government provides a five-year tax holiday for biodiesel start-ups, and the export-oriented sector is growing rapidly.

Like Mission and Jupiter, Sterling plans to use refined, bleached and deodorised palm olein as feedstock for diesel.

A three-year offtake agreement has already been signed between Sterling and an international energy trader.

Sterling Biofuels group managing director CRS Paragash said the company would target its product at the European market, where new legislation will require 5.75% of all fuels to contain biofuels by 2010.

“We believe this level of legislated demand, complemented by our existing contracts for both feedstock and output, puts the company in a very strong position to capitalise on our position in this growing industry,” Paragash said.

The company is forecasting a net profit of $24.6 million for 2007-08, when the plant reaches full production.

Sterling Biofuels expects to close its offer on September 11 ahead of a listing on September 28.

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