Three SA biofuel refineries set to come out of blocks
December 11, 2007
By INGI SALGADO
The government's biofuel strategy has given impetus to at least three large refinery projects that are at relatively advanced stages of planning, at the same time as producers of maize and other foodstuffs have been left out in the cold.
The first project is a joint venture between petrochemicals group Sasol, the state-owned Central Energy Fund (CEF) and black economic empowerment partner Siyanda Biodiesel to produce 100 million litres of biodiesel a year from soya beans at Newcastle, Sasolburg or Secunda.
The parties would meet next month to decide whether to proceed, Sibusiso Ngubane, project manager for the Energy Development Corporation, a CEF subsidiary, said yesterday.
The other two projects are separate joint ventures between the CEF and state development financier the Industrial Development Corporation (IDC). The first is mooted to produce 100 million litres of bioethanol from mostly sugar cane in Hoedspruit, Mpumalanga; and the second may produce the same quantity of bioethanol from sugar beet in Cradock, Eastern Cape.
Ngubane said the CEF and IDC boards would be approached for approvals in February. Prefeasibility and basic engineering design had already been completed, while environmental impact assessments had been commissioned.
Several proposed biofuel projects have been on ice pending release of the long-awaited strategy. Last week, minerals and energy minister Buyelwa Sonjica outlined its key features, although the document has yet to be released.
Sonjica said that only biofuels produced from sugar cane, sugar beet, canola, sunflower seeds and soya beans would be permitted in a trial phase lasting until 2013. She also chopped biofuel production targets from 4.5 percent of the country's fuel pool (as proposed in the draft strategy) to a conservative 2 percent.
Based on last year's fuel consumption statistics, mandatory blending of 2 percent would create an annual domestic market for bioethanol of 226 million litres and a market for biodiesel of 174 million litres. Bioethanol is blended into petrol and biodiesel into diesel for cleaner-burning fuel.
The exclusion - for now - of food crops as feedstock halts multibillion-rand plans by Ethanol Africa to build its first ethanol from maize plant.
Ethanol Africa executives could not be reached for comment yesterday, but Sterling Waterford, a significant shareholder, said the firm continued to believe that maize-to-ethanol represented "an economically attractive and socially responsible investment case". It awaited the final strategy document before commenting further.
Another maize project that will have to be canned in the short term is the IDC and CEF's proposed 150 million litres-a-year bioethanol plant mooted at Ogies in Mpumalanga.
The strategy also bars D1 Oils from using jatropha, an alien plant, as a feedstock for a proposed biodiesel refinery in KwaZulu-Natal. The department of agriculture is expected to start trials to test the invasive and self-propagating qualities of the plant.
D1 Oils spokesperson Penny Goodwin said the trials could take up to five years.
However, the refinery would be equipped to process multiple feedstocks, and its construction was on track for completion by the third quarter of next year, she said. It was not yet clear what feedstock the refinery would use or where it would be sourced.
The success of the sugar cane and sugar beet bioethanol projects will determine whether the IDC and CEF develop similar projects in Pondoland, Eastern Cape, and Makhathini, KwaZulu-Natal.
Business Watch, page 2
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