US biodiesel imports force D1 Oils to close refinery (From The Northern Echo)

US biodiesel imports force D1 Oils to close refinery

9:40am Thursday 10th April 2008 in

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The North-East was rocked last night by the news that D1 Oils is pulling outof the region. Deputy Business Editor Deborah Johnson investigates

BIOFUELS producer D1 Oils yesterday announced it is planning to close its North-East refinery as it battles to revive the loss-making business.

D1, hailed as one of the pioneers of the Teesside process industry, said its hand has been forced by spiralling production costs and pressure from cheap imports of biodiesel.

Forty jobs will be lost if the goahead is given for the Middlesbrough plant - previously D1's global headquarters - to close. A 30-day consultation process with employees is under way.

The announcement came as a blow for the North-East, with D1 being a "victim of circumstance", with prices of imports from the US as low as 11p a litre of biodiesel.

D1, which yesterday said it had made an annual loss of £46.1m, is also ready to close its refinery on Merseyside so it can refocus on plant science and growing jatropha crops needed for the production of biofuel.

Last year, it agreed a 50-50 fuel planting partnership with fuel company BP, which has led to the expansion of its jatropha crop plantations, in India, Africa and South-East Asia.

D1 wants to grow a million hectares by 2012.

It plans to raise another £16m through a share placing to to finance its planting and research venture.

Elliott Mannis, D1 chief executive, said its refining and trading operations had struggled in the face of cheap imported fuel but refocusing on planting would take the business to the next level.

"Refining food-grade vegetable oils into biodiesel in Europe has developed into a highly-competitive market, in which only very large-scale operations are viable,"

he said.

"We, therefore, intend to withdraw from this business and propose to close our UK refining sites.

"We believe that the best way to deliver value for shareholders is to leverage our technology and experience in jatropha to focus the business on the upstream breeding, planting and managing of new varieties of sustainable, commercial biofuel crops.

The business has struggled financially for some time, with its founder and former chairman, Karl Watkin, said to be considering bidding for the company, although his interest was said to be at a "very preliminary stage".

The announcement was met with shock in the North-East.

Ian Williams, director of business and industry at regional development agency One North- East, said: "This is very disappointing news for the region."

John Seymour, rural affairs spokesman for the North-East Biofuels Consortium, said: "European producers of biofuel are taking a hammering on price at the minute.

"I doubt D1 Oils will be the only one to withdraw from production.

This is very disappointing."