Natural Fuel has announced that it has completed an agreement with GEM BioFuels (GEM) for the supply of crude jatropha oil feedstock for its Singapore biodiesel facility. The supply of the crude jatropha oil will commence in early 2009 at a free on board delivery price of US$500 per tonne, adjusted for inflation, for the first five years of the 10 year agreement.

GEM will initially supply NFL with 2.5% of its Singapore facility production requirements, with supply increasing year on year as its jatropha plantation program in Madagascar develops. By 2013, 55% of GEM’s jatropha production will be provided to NFL, equivalent to 25% of the Singapore plant’s overall feedstock requirements.

Source: Natural Fuel jatropha announcement (PDF) (thanks for the tip Sreenivas)

Natural Fuel Limited (NFL) is pleased to announce it has signed a Letter of Intent for a long-term agreement with GEM BioFuels Plc (GEM) for the supply of crude jatropha oil as a feedstock for its Singapore biodiesel facility. The agreement will allow for the supply of up to 55% of GEM’s crude jatropha oil production in Madagascar to NFL at a free on board delivery price of US$500 per tonne. NFL will also subscribe £650,000 to secure a 3.9% equity position in GEM as part of its AIM listing scheduled for completion in October.

NFL’s biodiesel plants are designed to use a broad variety of virgin vegetable oils giving it significant flexibility in feedstock sourcing and blending to produce biodiesel to international specifications. Jatropha oil produces high quality biodiesel with superior cold flow properties, allowing NFL to blend it with palm oil and achieve cool weather biodiesel.

Mr Earl McConchie, NFL CEO said:

This partnership will allow NFL to lock in a substantial long term supply of crude jatropha oil at a very favourable price and represents the first key step in our ongoing feedstock strategy.

As the amount of jatropha oil being supplied by GEM increases each year, the underlying strategy and pricing will deliver greater operating profits to NFL. The use of jatropha oil is consistent with our strategy to use only sustainably-produced vegetable oils.

Beginning in early 2009, GEM will initially supply 2.5% of NFL’s Singapore facility production requirements, with supply increasing year on year as its jatropha plantation program develops.

Mr Paul Benetti, GEM Chief Executive Officer said:

At the maturity of GEM’s current plantation program in 2013, the Agreement will secure up to 25% of NFL’s production requirements in Singapore.

GEM’s existing land holding for jatropha plantations in Madagascar is in excess of 450,000 hectares. When fully mature, these plantations could provide up to 50% of NFL’s Singapore feedstock requirements.

Further details of the Off-take Agreement will be supplied upon formal completion of the contract.

Source: Natural Fuel via WA Business News