D1 Oils reports progress in slimmed-down energy crop business
Thursday 02 October 2008
Biofuels company D1 Oils has reported good progress with its global energy crop planting business, after its decision in April to withdraw from biodiesel refining activities in the UK.
The London-based company has now closed its refining sites at Middlesbrough and Bromborough, after the biodiesel operations were undercut by subsidised biofuels from abroad. Its management is optimistic of securing offers for refining equipment and the sites themselves.
We are pleased to have demonstrated through the delivery of our first crude vegetable oil the potential of jatropha as a biofuel crop.
Instead, the company is focused on developing new types of "sustainable" energy crops and also to cultivate the tropical oilseed-bearing tree Jatropha curcas to produce oil suitable as a biodiesel feedstock.
Reporting its interim financial results for the six months to June 30, 2008, on Tuesday, the company said it has now delivered its first 1,000 tonnes of crude jatropha oil.
Some 257,370 hectares of land are now hosting jatropha plantations under the feedstock production division of D1 that is 50% owned by BP - the plantations are mostly located in India, with smaller operations in South-East Asia and Africa. This side of the company, called D1-BP Fuel Crops Ltd, is aiming to bring its plantations to 300,000 hectares by the end of the year.
The long-term plan is to have one million hectares planted within the next four years.
Volumes of oil will increase in 2009 as existing trees mature and younger trees become productive, the company added.
With this year's controversy over biofuels hitting global food prices, D1 Oils noted that Jatropha produces an inedible oil feedstock and can make use of land that is not suitable for arable agriculture.
Crop research
Meanwhile, the wholly-owned plant research side of D1 Oils, D1 Oils Plant Science Limited, is seeking to further develop the Jatropha varieties being used, as well as develop alternative non-food energy crops. It has a central development facility in Cape Verde, as well as development centres in Zambia and India as well as 34 product placement and 39 trial sites in operation worldwide.
The plan is for the plant science division, which has expanded from 51 to 92 staff this year, to receive royalties for energy crops used to make biofuels.
Work is now underway to evaluate the supply chain for Jatropha biodiesel to work out a detailed greenhouse gas emissions profile to compare with possible sustainability criteria currently under debate in Europe and the UK.
D1 Oils chairman Lord Oxburgh said: "As a leader in jatropha plant science and a significant grower of jatropha through our joint venture with BP, D1 is well positioned to supply a global biofuels market that increasingly favours fuels that are both sustainable and competitive. Encouraging progress has been made in both plant science and planting during the last six months, and we are pleased to have demonstrated through the delivery of our first crude vegetable oil the potential of jatropha as a biofuel crop."
Losses
Although the company first listed on the Alternative Investment Market of the London Stock Exchange in 2004 is still loss-making, its directors said they had raised £14.9 million in May to take the company through to the end of 2009. This money was raised by issuing more shares to D1 Oils shareholders.
Shedding the refining and biodiesel trading business had cut overheads by £10 million, D1 Oils said, but overall losses for the first half of 2008 were £13.1 million, a rise on the £10.3 million loss seen in the first half of 2007. Most of the losses came from the discontinued side of the business, but continuing plant science research and planting operations still ran up a £5.7m loss.
Commenting on the results, D1 Oils chief executive Elliott Mannis said: "The first six months of 2008 have seen encouraging progress in our upstream operations, now the exclusive focus of the business. We have delivered our first crude jatropha oil from our plantations, and production is expected to be approximately 1,000 tonnes in 2008. Based on the Board's revised business plan, the funds raised of £14.9m in May 2008 are expected to allow the Company to remain cash positive through to the end of 2009."
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