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The Sorry State of the Australian Biofuel Business
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Despite this a small group of determined publicly listed companies has emerged to form something of an Australian biofuel stock market micro-sector.
Unfortunately, during 2007 feedstock prices accelerated to such a degree that many of the companies – already struggling financially – found it more rewarding to shut down their operations than to try to persevere.
Here is the current state of play for the eight stocks:
ABG owns a large biodiesel production facility in Queensland. In November 2007 it suspended production, and has placed the plant on stand-by status, hoping for government support for biodiesel. It recorded a $10.8 million loss in the June 2007 half year, and expects to announce a big loss for calendar 2007.
Agri Energy has been working to develop biofuels businesses in Australia, Europe and the US. However, in 2007 it suspended developments at home, and in January 2008 it announced the sale of its US operation. It retains projects under development in Austria and Hungary. It recorded a $14.4 million loss in its June 2007 financial year.
Australian Renewable Fuels operates biodiesel plants in South Australia and Western Australia. It made a large loss in its June 2007 year, and following sharp increases in feedstock prices, during 2007 it placed both plants on a “care and maintenance basis”. It continues to develop its US interests. It made a $33.7 million loss in its June 2007 financial year.
Babcock & Brown Environmental Investments owns an ethanol business in the US and a lubricant oil refinery in Australia, and it owns with Natural Fuel a biodiesel business. It has incurred heavy losses, in part due to problems with the biodiesel operation, and the company’s parent, the Babcock and Brown investment bank, has offered to buy back all shares in the company. It recorded a $20 million loss in the June 2007 financial year.
Jatoil, listed on the stock exchange in January 2008, plans to grow and market biofuel feedstock, based on the oil-bearing plant Jatropha.
Mission Biofuels officially opened its Malaysian biodiesel plant in December 2007, and is building a second. It claims it to be one of the lowest-cost biodiesel plants in the world. It also grows biofuel feedstock in India. It recorded a $1.8 million loss in the June 2007 year.
Natural Fuel owns, with Babcock & Brown Environmental Investments, a biodiesel plant in Darwin that has run into technical difficulties, and which is not currently producing biodiesel. It is building facilities in Singapore, with refined glycerine production starting in February 2008, but has postponed the launch of biodiesel production until feedstock prices fall. It recorded a $47.8 million loss in June 2007.
Sterling Biofuels International has built a biodiesel plant in Malaysia. However, it has not launched production, due to high feedstock prices. It recorded a $3 million loss in June 2007.
February 7th, 2008
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