The Perth-based company is already establishing a 100,000 tonne per annum biodiesel refinery in Malaysia, which at last report was due to start production in October.
In a statement yesterday, Mission said it had signed a memorandum of understanding with East River Energy Resources and Science Technology regarding a biodiesel production sharing contract.
ER is currently commissioning a 50,000tpa biodiesel plant at Tongxiang, about 140km from Shanghai, which Mission would use to produce and sell biodiesel into the Chinese market.
The companies plan to replace the MoU with a definitive agreement in the next 90 days.
Up to 2000t of biodiesel produced per month from the ER facility would then be sold to oil refiner PetroChina, under a separate letter of intent signed with Mission.
“This is an excellent development for the company and a very pleasing start for our business in China,” Mission managing director Nathan Mahalingam said.
He estimated that Mission would earn revenue of $A16 million in the first year of Chinese operations from an expected 24,000t of biodiesel production.
“ER is agreeable to expand its capacity at its own cost to cater for another 50,000tpa exclusively for Mission Biofuels,” Mahalingam said.
“Should Mission give the go-ahead, ER has indicated that this additional capacity will be ready within nine months.”
"Cheap edible and non-edible" feedstock for the plant will be secured by Mission from South Asia and South East Asia.
Mahalingam estimated output from the plant would increase to 70,000tpa by 2008-09.
In 2005, China consumed 82 million tonnes of diesel – expected to increase to 110MMt by 2010.
“A 5% biodiesel use will see a potential market of over 5MMt developing while current biodiesel production is less than 200,000tpa,” Mahalingam said.
