China Agro-Technology to build biodiesel refinery

Singapore-based China Agro-Technology (OTC: CAGTF) announced today that it signed a memorandum of understanding with the government of Beihai to build a biodiesel refinery in the southern China city.

China Agro, a forestry company, said it expects to invest up to $200 million over the next four years to construct the plant, which it said would produce 2 million metric tons of biodiesel annually at full capacity.

"Biodiesel has the highest demand of any commodity in China. To meet the 2020 B10 Kyoto Protocol requirement, China needs 12,400,000 tons of biodiesel in 2008," said Harry He, founder and chairman of China Agro.

"However in 2007, the supply in China was less than 1 million tons. Therefore, the product from this biodiesel plant will be a very important part of China's effort to meet the requirement."

China Agro estimated that beginning in the first quarter of 2009 it could produce a minimum of 80,000 to 100,000 metric tons and yield a net profit of $30 million to $40 million.

The company also said its advanced leaf growing technology, coupled with a suitable land environment, would make it an essential supplier of Jatropha crude oil.

"More importantly, however, by being able to produce our own refined biodiesel at the Beihai facility, CAT also will be in a strategically important position in the supply of biofuel," said He.

"We are currently forming our team of professionals and consultants to execute the plan."

China Agro said the new refinery should take six months to complete.