US undermines D1 Oil's UK biofuel refining operations
10 Apr 2008
London - UK biodiesel company D1 Oils plc is shutting down its biofuels refining and trading operations, which are based at Middlesrough and Bromborough, and will instead concentrate on the upstream breeding, development and planting of new varieties of commercial biofuel crops. The 273- employee company
announced the move alongside losses of £46.1 million in a 9 April preliminary results announcement for 2007.Company executives blamed the closures on the impact of rising feedstock prices and imports of heavily subsidised US biodiesel, so-called B99 exports, which, it said, had undermined the European biodiesel refining industry. The US exports, it noted, are the subject of a joint anti-dumping and antisubsidy complaint to the European Commission.
"Refining food-grade vegetable oils into biodiesel in Europe has developed into a highly competitive market in which only very large-scale operations are viable ... We therefore intend to withdraw from this business and propose to close our UK refining sites," said Elliott Mannis, chief executive officer of D1 Oils.
D1 Oils began 2007 with plans to increase UK refining capacity in advance of the 1 April 2008 introduction of the Renewable Transport Fuels Obligation in the UK. The company increased the capacity of its Teesside site to 42,000 tonnes in the first half of the year with the addition of a fifth refinery unit. This was the first upgraded D1 30 unit with an enhanced capacity of 10,000 tonnes per year.
Final commissioning was completed by the third quarter of 2007. However, as market conditions deteriorated, D1 held capacity at Teesside at 42,000 tonnes. Having completed the acquisition of our Bromborough site in January 2007, it began the conversion of the existing facilities, which formerly produced fuel and lubricant additives, to create 100,000 tonnes of initial biodiesel refining capacity. As market conditions changed, it slowed the timetable for commissioning the first 50,000 tonnes of this capacity, and finally suspended the addition of the second 50,000 tonnes.
D1 Oils will now focus on developing low-cost and sustainable raw materials for biofuels that are not subject to the same price pressure as food-grade cereals and oil seeds. The company, said Mannis: "will leverage our technology and experience in Jatropha to focus the business on the upstream breeding, planting and managing of new varieties of sustainable, commercial biofuel crops."
According to the company, Jatropha offers the advanages of reforestation and sequestration of CO2 in the trees and their root systems, the production of a feedstock oil for biodiesel from the grain, and the creation of jobs in some of the poorest parts of the world."
Company non-executive chairman Lord Oxburgh of Liverpool stated:
"The political momenum to reduce emissions from transport and enhance energy security remains substantial in the majority of developed economies, and there is growing recognition of the potential for farmers in the developing world to meet this demand. Against this background there is real concern that it will not be possible to meet demand for both fuel and food without threatening forests in developing countries."
