November 12, 2007 (Platts) – Natural Fuel Australia Ltd. has shut the Darwin biodiesel plant because of poor production economics, just a year after startup and barely months after making its first exports of biodiesel to Asian and US customers, several well-placed industry sources said Tuesday.
The biodiesel plant, which at 120,000 mt/year (2,400 b/d) of biodiesel production is Australia’s biggest biodiesel refinery and one of the world’s largest, was unlikely to restart any time soon, sources said.
The plant was shut in September or October, sources said. The plant opened in November 2006 and hit its nameplate capacity in March. In August, it announced its first export of 7,700 mt of biodiesel to Asia and the US. Calls to top officials from Natural Fuel Australia’s parent companies — Sydney-listed Natural Fuel Ltd. and Babcock & Brown Environmental Investments Ltd. — were not immediately returned Tuesday.
Sources said that the Darwin plant was struggling to stay profitable, with feedstock costs soaring this year and the value of biodiesel itself not always keeping up. The plant has also struggled with quality issues since ramping up production to capacity levels earlier this year. It could not be immediately confirmed whether the plant was still struggling with
problems over production quality. In March, Natural Fuel and BEI said unexpected characteristics” found in palm oil being run through the plant had introduced impurities
into its biodiesel.
The news is another blow to the biodiesel industry in Asia, which in recent weeks has seen rival producer Australian Renewable Fuels call halt to production at its two plants in Western Australia and South Australia on high feedstock costs. Other biodiesel plants around Asia are also shutting down, relocating or converting production to alternative specialty chemical products, like dioctyl phthalate, a plasticizer that can be used to make PVC.
The closure of the Darwin plant is also bad news for the area. In August, Northern Territory Chief Minister Clare Martin celebrated the first exports of biodiesel from the plant, calling the plant a “great vote of confidence in our future.” Martin estimated at the time that the plant would create about 100 jobs directly and indirectly, and generate
millions of Australian dollars for the local economy.