D1 Oils is planning to cover more than 6m hectares in developing countries with a tree that produces an oil that, when blended with diesel oil, creates a greener fuel for trucks and buses.

D1 Oils is planning to cover more than 6m hectares in developing countries with a tree that produces an oil that, when blended with diesel oil, creates a greener fuel for trucks and buses.

The company has raised more than £11m ($19 million) net of expenses through a placing at 160p a share.

At this placing price, the company will have a market valuation of £34m when the shares start trading on Aim next Friday.

The company was founded three years ago with the idea of selling its refining technology. It makes refineries the size of lorry containers, capable of converting vegetable oil into biodiesel.

However the cost of rapeseed oil made biodiesel look uneconomic, so the company looked around for another source of vegetable oil and identified a tree known as Jatropha Curcus, which grows in Africa and the Philippines and produces inedible oil-bearing seeds over a 30-year lifespan. The company already has contracts for 24,000 tonnes a year of vegetable oil to be harvested from the wild in these places and has started planting 37,000 hectares in Africa, India and the Philippines with seedlings that should start producing oil in the next two years.

A further 6m hectares - an area twice the size of Belgium - are under option.
Philip Wood, chief executive, said that rapeseed oil was currently selling at US$690 a tonne compared with $275 a tonne for the type of crude vegetable oil that would come from Jatropha plantations.

It could be refined locally using the company's technology or could be crushed and refined at larger refineries with excess capacity.

European biodiesel production last year was 1.5bn litres.

Forecasts suggest that, by 2010, European biodiesel production will meet half expected demand. Biodiesel produces fewer particulates and much less greenhouse gas.

By David Blackwell
Published: October 22 2004 03:00
http://news.ft.com/cms/s/07d2834c-23c6-11d9-aee5-00000e2511c8.html