New biodiesel producer in Singapore favors jatropha over palm oil

Singapore (Platts)--12Apr2007

A Singapore-based diesel engineering group has embarked on a project to
build a biodiesel plant in the island state that will break away from the
conventional palm oil to use jatropha curcas feedstock and other alternatives,
affording the company more control over its raw material costs.
Biofuel producers in Asia have naturally leaned in favor of palm oil
feedstock, because of its abundant availability from Malaysia and Indonesia.
But "buying palm oil from the 'big boys' means that we will have to buy
at international prices, dictated by the others, and therefore not within our
control," Peter Cheng, CEO of Van Der Horst Holdings, told Platts.
Van Der Horst last month signed a joint-venture agreement with the
Institute of Environmental Science and Engineering, a division of Singapore's
Nanyang Technological University, to build a 200,000 mt/year biodiesel plant
on Jurong Island.
"We intend to grow our own agricultural oil from japtropha curcas and
marine algae," Cheng was quoted as saying in a company statement.
The CEO told Platts: "By employing manpower to harvest our own jatropha
from our own plantation means that we are in control of our own feedstock."
The company is planning a second biodiesel plant in the Iskandar
Development Region of Johor in neighboring Malaysia after the start-up of the
Singapore plant, expected in December 2008. Each plant will cost about $40
million to build.

JATROPHA NEEDS NO REFINING
Jatropha curcas, which takes only one year to bear fruit in sunny
weather, is an inedible plant that can be grown on semi-arid land, and
therefore does not compete for space with good agricultural land.
And unlike palm oil, extracted jatropha oil does not need to be refined
nor degummed before conversion to biodiesel, said Tay Joo Hwa, director and
CEO of the IESE.
The joint venture has already secured 1,000 hectares of concession land
in the province of Pursat in Cambodia for growing jatropha curcas. It has an
agreement with the provincial government of Pursat to grow on 20,000 hectares
of land.
The JV has also received an offer from the forest department of the
province of Panzhihua in China's Sichuan province, to lease some 667 hectares
to plant jatropha curcas. In addition, the JV intends to develop plantations
in India, Laos and Myanmar.
The IESE has secured a newly developed jatropha seed strain that can
yield up to twice the normal plant's yield to sow in its plantations, Cheng
said.
"The normal jatropha seed yields two tonnes per hectare in a year. Our
new strain can yield about three tonnes," Cheng said. Palm oil, in comparison,
yields 4.3 tonnes per hectare per year, he added.
Cheng said his company was also looking at extracting oil from marine
algae. "Research has shown that given the same unit area, algae could produce
40 times more oil than a normal species of jatropha. Again, algae does not
compete with land for food source and is also carbon dioxide
emission-neutral," he said.

PALM OIL PAYS OTHER DIVIDENDS
Not biodiesel producers favor the use of alternative crops such as
jatropha, in part because there is no significant availability.
Carotech, based in Ipoh, Malaysia, which sells its biodiesel production
mainly to Europe and Japan, said jatropha would not be an alternative crop for
the company.
"We would not use such feedstock as it does not allow us to maximize our
return," said Andrew Goh, chief financial officer of Carotech. "With palm oil,
we are able to produce biodiesel, glycerin, palm vitamin E, beta carotene and
sterols (steroid alcohols). You will not be able to extract the vitamin E,
beta carotene and sterols from jatropha," he said, adding that those products
accounted for 50% of Carotech's revenue.
"Therefore, assuming the cost of jatropha oil is the same as those of
palm -- a very optimistic assumption -- we will lose 50% of our revenue by
using jatropha," Goh said.
The Van Der Horst project will be the second large-scale project on
Jurong Island. In November 2006, Australia's Natural Fuel broke ground on a
palm oil-based 1.8 million mt/year biodiesel plant, which will be built over
three phases. Upon completion of the first phase in end-2007, the facility
will have an annual production capacity of 600,000 mt (700 million liters) of
biodiesel. Once all three phases are completed, the facility will have the
potential to produce up to 1.8 million mt of biodiesel annually.
Biodiesel, produced by the trans-esterification of vegetable oils or
fats, is blended in 1-20% ratio with regular diesel to bring down emission
levels and help reduce oil use.
--Weilyn Loo, weilyn_loo@platts.com