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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Wednesday, March 15, 2006

Biodiesel fuels Asia plantation stocks

Living in one of Asia's most polluted cities has piqued Putut Andanawarih's interest in a cleaner form of fuel known as biodiesel. The Jakarta-based fund manager finds such "green fuel" even more appealing because of the potential impact on his portfolio of palm oil plantation stocks.

High crude oil prices and a European Union-led drive for cleaner and renewable energy have boosted the development of alternative fuels including ethanol, extracted from corn or sugarcane, and biodiesel, made from rapeseed, soya or palm oil.
Recent interest in biofuels has driven a rally in shares of Malaysian and Indonesian palm oil plantation companies, sending shares in IOI Corp and Indonesia's Astra Agro Lestari to all-time highs.

Analysts reckon these plantation stocks stand a good chance of being re-rated with higher earnings and share price forecasts, particularly as the impact of biodiesel on global supply and demand for edible oils becomes clearer.

About 80% of the world's palm oil, which is used for cooking oils and margarine, is grown in Malaysia and Indonesia.

"What we see in biodiesel is a future potential for increased demand for palm oil, driven by the energy sector," said Andanawarih, investment director at Australian fund manager First State Investments in Jakarta.

Andanawarih has been adding to his positions in Indonesian plantation firms such as Astra Agro, London Sumatra and Bakrie Sumatra Plantation, and in IOI Corp and Golden Hope.

Subramanya Bettadapura, energy and power analyst at research consultant Frost & Sullivan, said biodiesel output in Europe was likely to increase 10% this year from around three million tonnes in 2005. Production in the United States could top one million tonnes, compared with 750,000 tonnes in 2005.

US President George W Bush also gave a boost to green fuels with his recent rallying call for improving technologies to cut Middle East oil imports by 75% by 2025. The common alternative fuel in the US is ethanol.

Ivy Ng, analyst at CIMB in Kuala Lumpur, noted that most plantation stocks have outperformed the market and palm oil prices in the past year, suggesting some of the bullish expectations might have already been priced in.

"Investors will have to be very selective," said Ng, whose top Malaysian picks are Golden Hope and Asiatic Development

Ng said she expects the price of crude palm oil, currently around RM1,400 per tonne, to hit RM1,580 this year, and shares in Golden Hope and Asiatic could rise 15% and 10%, respectively, by the year-end.

PPB Oil Palms and United Plantations provide a pure play on palm oil and exclude other businesses such as property and rubber, Ng said.

In Indonesia, she likes Bakrie Sumatra, which is controlled by the family of cabinet minister Aburizal Bakrie.

Some foreign investors are still wary of investing in Indonesian plantation stocks such as Bakrie Sumatra, Ng said, as many of the big business groups defaulted on their foreign debts during the 1997-98 financial crisis.

However, Andanawarih said most of the Indonesian plantation firms have since restructured and now have much healthier books with manageable levels of debt.

So far, the use of palm oil as feed stock for biodiesel is minimal, Bettadapura said, as just 1% of biodiesel made worldwide last year came from palm oil.

"But things are changing fast," he added.

The European Union, which has set a non-binding target of 5.75% biofuel content by 2010, last year turned into a net importer of rapeseed oil and soyabean oil for the first time, according to Hamburg-based industry publication Oil World.

"About 95% of the current demand growth is due to booming consumption of oils and fats for biofuels, primarily for the production of biodiesel," Oil World said.

Malaysia, the world's biggest palm oil producer and exporter, has already started to build plants which will next year supply a hybrid fuel made up of 95% diesel and 5% palm oil.

Plantation firm Kulim Bhd has teamed up with Germany's CremerOleo GmbH & Co to set up two biofuel plants, one in Malaysia and one in neighbouring Singapore.

All good news for Andanawarih's plantation stocks, even though the Jakarta resident is unlikely to get much reprieve from the smog hanging over his city.

While Indonesia, the world's second-largest palmoil producer, wants to become the world leader, it has no plans to encourage biodiesel at home. -- Reuters

Reuters, via The Edge Daily.

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