Biodiesel plant to open if price is right

By ALAN WOOD - BusinessDay

Biodiesel New Zealand management is awaiting fuel-sector price developments before it commits to a new $10 million to $20m biodiesel plant at its Rolleston site.

A recommendation by the team to the firm's state-owned parent Solid Energy to go ahead with the plant could come in 18 to 24 months, says Christchurch's Biodiesel NZ general manager Andrew Simcock.

The parent had already made a capital investment in the order of $20m in Biodiesel NZ including an oilseed rape (canola) storage facility and a pressing plant in Rolleston and a small biodiesel plant at an Addington site.

But a new plant would depend in part on another fuel price surge, which would make oilseed rape-canola growing by farmers and a biodiesel plant more economic.

"The plan is we build a new biodiesel plant within 18 months to two years at Rolleston depending on market conditions," Simcock said.

"We're looking at the market and it would take market conditions to change and improve. We're reviewing it six-monthly and when the conditions are right and we have the right track record we'd put a proposal in front of the board."

Biodiesel in May 2007 launched its ambitions to be a big biodiesel maker. At that time it said it wanted to take biodiesel production from one million litres a year to 70 million litres in three years.

Simcock last week said the company was now committed to producing 70 million litres a year of blended transport fuel by 2011.

It had support from the Government in terms of a grant to enable that fuel to be close in price to that of mineral-based diesel now selling at the pump for between $1.10 and $1.15 a litre.

Simcock said the parent, Solid Energy, and its chief executive Don Elder were committed to expanding the company's approach to become an "energy" rather than coal company, incorporating new and renewable energy sources. "He's got very strong aspirations for New Zealand in terms of an energy business rather than a coal business."

Biodiesel NZ produced two main strains of its biogold branded product – NZ100 biodiesel, which was particularly useful for the boat industry helping the impact of oil spillages, and the NZ20 blend (one-fifth biodiesel).

NZ20 was sold into the commercial market with the help of a Government grant of around 8 cents a litre of the blended fuel. "We're around pump [prices] or a bit below maybe," he said.

Solid Energy bought Canterbury Biodiesel in mid 2007, changed its name to Biodiesel New Zealand and launched an oilseed rape-based business, incorporating the collection of used cooking oil from throughout New Zealand.
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Biodiesel NZ had ramped up the amount of oilseed rape being processed by upgrading the processing plant in Rolleston in October-November 2009.

"We've completed a plant out at Rolleston, and we have 10,000 tonne of storage and eight presses ... that's been operating."

The number of farmers growing oilseed rape under contract had grown to 60 from 24 in the last year or so. Biodiesel NZ had several thousand hectares of land for oilseed rape and other rotated crops, spread between Marlborough and Southland.

The company now had annual revenues of "several million" including those from crops, used cooking oil collection and the sale of biofuels.

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