(EnergyAsia, May 9, Friday) — Australia-listed Mission Biofuels Limited has provided an update of its business operations.
 
During the commissioning phase, its plant produced 3,500 tonnes of biodiesel and sold approximately 2,500 tonnes. The plant also produced almost 350 tonnes of crude glycerine, all of which has been converted and sold as pharmaceutical grade purified glycerine.

The company said that the current high feedstock prices is making it unviable to produce biodiesel.

As a result, it has taken decided to only produce biodiesel if it is profitable to do so.

The company said: “This will only be possible if we can secure sufficient quantities of feedstock at reasonable prices or if we are able to achieve higher prices with our off-take partners in both the US and Europe.”

The company has been investigating opportunities to secure moderate quantities of feedstock at reasonable prices which will allow us to produce and sell biodiesel on a “jobbing basis”.

Crude palm oil (CPO) still remains the cheapest vegetable oil as the cost of rapeseed oil and soy oil have also increased sharply over the same period.

The coming of the summer season in Europe will allow a higher proportion of palm methyl ester (PME) to be blended further helping to improve the demand and prices of the product.

For this month, the company expects to profitably produce and sell approximately 4,000 tonnes of biodiesel.

Meanwhile, the company’s interim strategy to source supplies of crude glycerine and purify these to 99.5% pharmaceutical grade purified glycerine has been rolled out.

To date, it has produced and sold more than 600 tonnes. It is pushing the plant to operate at capacity of 900 tonnes from May 2008.

Mission said it has secured adequate supplies of crude glycerine to support this interim strategy. 

The production of purified glycerine at full capacity based on current economics will allow the company’s refinery operations to remain profitable hence allowing the plant to be operational and staff fully deployed.

This will also allow the plant to be in readiness to produce biodiesel as and when required.

Mission Biofuels also announced that its upstream Jatropha curcas feedstock business in India continues to perform well. Having achieved its 2007 target of planting 100,000 acres ahead of its schedule, the company’s feedstock business achieved a gross profit of A$3.01 million during the six months period ending December 31 2007. (US$1=A$1.06).

The company previously announced that it targets to increase planted acreage by 650,000 acres in calendar year 2008, plant a further 750,000 acres in 2009 and another one million acres in 2010, bringing the total acreage planted to 2.5 million acres by end 2010 through a mix of leased land, government partnerships and contract farming arrangements which the company has announced recently.

At maturity, this acreage is expected to produce more than two million tonnes of Jatropha crude oil (JCO), which will be almost six times Mission’s current refinery capacity of 350,000 tonnes per annum once the second 250,000-tonne per year plant becomes operational in September 2008.

The company is also quickly progressing its seed procurement and plantation material supply initiatives. It currently has more than 70 owned nurseries and has procurement agreements with more than 50 third party nurseries in India. The current demand, internally and externally, for seeds as plantation material allows the feedstock business to achieve higher realisations by selling the seeds as planting material rather than extracting oil for the production of biodiesel.

The company is also building up a strong network of field professionals for the coming planting season. In India, the employee strength has increased from 80 people in February 2008 to more than 460 people as now.

Recent announcements by the Indian government, which are currently under debate before being passed into law, contain several positives for the company’s feedstock business.

Firstly, profits earned from the sale of saplings will be deemed to be agricultural income beginning April 1, 2008. Agricultural income is not taxed in India.

Further, expenditure incurred on R&D for developing good quality seeds will become eligible for a tax deduction to the extent of 150% of the amount spent in the financial year. This benefit will also be available beginning April 1, 2008 and will effectively reduce Mission’s cost of R&D.

The company’s plans to expand the feedstock business to a Southeast Asian country through a joint effort with a local land owner with access to 50,000 acres of marginal land which has been deemed suitable for Jatropha curcas are nearing finalisation. The company expects to establish and commence nursery operations there shortly.

The company said its two windmills of 1.65 megawatts each (total nameplate capacity of 3.3MW) were commissioned in February and immediately started generating and selling electricity to the state utility. The windmills are performing as expected.

To-date more than 10,000 kWh of electricity has been generated with a total run-time of more than 150 hours.

Mission said it will continue to add to its portfolio of windmills every financial year. Based on expected revenues for the next financial year in 2009, Mission expects to add wind turbines totalling15 to 18 MW of generating capacity to its existing portfolio.