News

June 19, 2008

Amid Increasing Doubts About Jatropha After The Saga At D1 Oils, GEM Biofuels Is Sticking To A Low Cost Model

By Rue Swabey

Doubts are growing about jatropha, the biodiesel feedstock that was so recently hailed as the miracle solution for the biofuels industry. Unlike other feedstocks, jatropha is inedible, can grow on degraded land and requires little water. However it has never been planted on a mass scale before. Most of the problems at Aim-listed D1 Oils, a vertically integrated “earth to engine” company, are related to ill-advised strategic decisions and competition from subsidised imports of US biodiesel into Europe. But not all - the company is also experiencing issues with its jatropha crop. In April D1 Oils announced that it has made “provisions against planting” in light of “poor germination and other general agricultural risks”. Consequently its total jatropha planting and rights to offtake at 31st March 2008 is 192,000 hectares, down from 200,290 at September 2007.

Last year D1 Oils lost £46.1 million. In March its non-executive director and founder Karl Watkin resigned, blaming the company’s problems on unfair competition from heavily subsidised US biodiesel imports. D1 Oils has mothballed a £49 million refinery in Bromborough, England, and withdrawn from all refining and trading activities. The company is now focusing solely on its agronomy assets and the upstream business. In April, D1 Oils placed 64.3 million shares at 25p (a deep discount to the...