OPERATIONS

Malaysian biodiesel plant ready for production

STERLING Biofuels International has taken delivery of its Malaysian-based biodiesel production fa...

Malaysian biodiesel plant ready for production

But the Perth-based company will delay bringing the plant online until palm oil feedstock becomes cheaper.

"Given the continuing spike in palm feedstock without any corresponding increase in the biodiesel selling price, it is prudent to delay commencement of production," it said in May.

"The company believes that with rising feedstock production, feedstock prices will fall towards historical averages in the latter half of the year."

Sterling this morning said the actual capital cost for the plant was only $19.4 million, a saving of about 9% or $1.9 million on the budgeted capital cost of $21.3 million, as outlined in the company’s IPO prospectus.

Sterling said all pre-commissioning procedures had been successfully completed at the 100,000 tonne per annum plant.

The company was waiting on final sign-off from the fire and safety authorities, which was expected by the end of the month, before commencing full-cycle commissioning.

Primary technology provider Desmet warranted the performance of the plant to produce biodiesel that would meet the European EN14214 and American ASTMD-6751 specifications, Sterling added.

The company’s cash balance at June 30 was about $13 million which, together with the value of its constructed plant, placed the company in a strong net asset position to ride out the spike in crude palm oil prices.

“This is a very pleasing result, especially in light of prevailing tight labour markets and a tight metals market,” said Sterling group managing director CRS Paragash.

“The construction of the production facility on time and under budget has removed one of the main risks associated with the project, and at the same time makes available further cash resources for the company,” he added.

Sterling is targeting its product at the European market, where recent legislation requires 5.75% of all fuels to contain biofuels by 2010.

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