Sunday, March 09, 2008

Fate of New Biodiesel Manufacturing Plants

Oilseed prices have rocketed up in price and availability has plateaued. Soybean oil prices have increased about 300% over the past 2-4 years, as have palm oil prices.

These two feedstocks have been seen as the cornerstone of the supplies for the biodiesel plant constructed in Darwin at the Darwin Business Park. It cost around A$75 million, but will it be a silver elephant?

These radical increases in feedstock prices for what has been imported materials, along with rapidly escalating logistics and transport charges might mean the local refinery will fail, at least in the current structure.

At present the system is apparently refining glycerin to meet high quality demands in the food and pharmecutical industries, and not biodiesel, but needs to be producing biodiesel. While local NT and even Australian demand is fair, under current government arrangements over tariffs, excise and other issues, the big hiccup is feedstock.

The plant owners are keeping very quiet, very quiet and it is rumoured they are struggling financially.

How many other production plants are in the same predicament?

There is no local production of agricultural produced vegetable oil materials, although some research has been running on a oil soybean industry. While this development is occurring independent of the biodiesel plant, it is likely to be some years away from, if ever, efficient production of economic crops of oil based soybeans, on a large enough scale to contribute significantly to a feedstock source.

Some other species are also being investigated.

The NT does not have a good track record on cropping on the scale required, and anyway the local NT environmental lobby would not want land cleared and used for this purpose.....almost under any set of circumstances. And they are well organised.

And even if enough was produced, would it be cheap enough to use as a feedstock anyway given world prices for the soybean oil?

An interesting conundrum.

Are there other biodiesel plants where feedstock prices are cruelling biodiesel production, even at current mineral oil prices of around US$100 + ?


Anonymous said...

Labor new goverment should act quickly to facilitate development of oil palm plantations in the ideally wet NT and the Kimberleys,also soy bean seems ideal for the area ,both get huge prices and are needed for the biodiesel plant as feedstock ,why not grow them locally ,it is a need ,not a luxury to balance Australian trade deficit and saving on iol imports with biodiesel and ethanol sounds perfectly .
It is a great investment to change the future of the North for good!

Peter H said...

Soybean production in the north is being investigated and researched now. Local production is a complex issue involving a much wider range of issues including land, farmers, varieties etc. It is under development. At moment world market prices for soybean make it too expensive in Australia for biofuel anyway as it competes with a demand for animal and human food stock use, where most now is used.

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