Biofuels projects in Britain will struggle to get financing until the outlook improves with the woes of high profile Biofuels Corp casting a shadow over the sector, the head of a major UK biofuels producer said on Monday. "Until the general dynamics of the market start to sort themselves out I think it is unrealistic to expect investors to put more money into the sector where a number of them have been very badly burnt," Andy Hunter, chief executive officer of Argent Energy, said.
By Nigel Hunt
LONDON (Reuters) - Biofuels projects in Britain will struggle to get financing until the outlook improves with the woes of high profile Biofuels Corp casting a shadow over the sector, the head of a major UK biofuels producer said on Monday.
"Until the general dynamics of the market start to sort themselves out I think it is unrealistic to expect investors to put more money into the sector where a number of them have been very badly burnt," Andy Hunter, chief executive officer of Argent Energy, said.
Biofuels Corp, which built a major biodiesel plant in northeast England, were delisted in August 2007 and the majority of its equity was transferred to banker Barclays after the firm wracked up large debts.
!ADVERTISEMENT!"Clearly as one of the most high profile IPOs to date, the fact that the business collapsed as far as the original investors are concerned has not helped the industry," he told the Reuters Global Agriculture and Biofuel Summit.
Biofuels Corp shares floated in June 2004 at 75 pence ($1.47) and set a 2005 high of 322 pence before production problems and deteriorating market conditions led to a slide in the share price down to 1.5 pence prior to delisting.
Argent Energy operates a biodiesel plant in Scotland which uses used cooking oil and tallow as its inputs.
The company had plans to built a second plant in northwest England but has now put these on hold.
"We have no other financing needs for that (the first plant in Scotland) and can survive even at current prices. In terms of the second plant we would require further equity that we do not have at the moment," he said.
Hunter also cited U.S. biodiesel subsidy programs as a key factor behind the current problems of European Union producers.
Argent have plans to built biodiesel plants in New Zealand, also relying on tallow.
"We were looking for markets with a relatively large supply of product and in New Zealand there are an awful lot of sheep and cattle and they do generate a lot of tallow," he said.
Hunter said a U.S. subsidy program, which has been challenged by European producers, needed to be ended.
"We won't invest there (in New Zealand) until we see the inequalities coming out of the U.S. market righted. These things need to be sorted out to make the investment in biodiesel in New Zealand commercially viable," he said.
(Reporting by Nigel Hunt; Editing by Michael Roddy)
