MYSTERY surrounds the future of a North-East biofuels plant after it emerged its workforce had been sent home indefinitely.

Biofuels Corporation, which operates Teesside’s biodiesel refinery at Seal Sands – one of the biggest of its kind in the world – stopped operations earlier this week, and told its workforce of 75 the shutdown was for an indefinite period.

It is understood workers have been paid until the middle of the month, but last night it remained unclear what the future for Biofuels Corporation and its employees would be.

The biofuels sector has suffered significantly recently, with D1 Oils pulling out of Teesside last year as it struggled to compete with the rising price of oil.

The practice of splash and dash – the shipping of biodiesel from Europe to the US and back again, to exploit American agricultural subsidies – has also left British firms unable to compete with the price of imports.

Biofuels Corporation, which opened in 2005, has been through a turbulent time, which saw it delisted from the AIM in 2007. It became 100 per cent owned by Barclays in a debt-for-equity swap.

Earlier this year, chief executive Richard Nickels said the multi-feedstock plant had switched to running almost entirely on used cooking oil to try to lift output levels.

Last night, it was stressed that biofuels still has a key role to play in the region, with the £250m Ensus bioethanol plant set to come online at Wilton within the next few months.

Mark Lewis, a director of North-East Biofuels (Neb), said many plants had turned to using cooking oil or running below capacity to try and stay in business during the recent tough period, but predicted Biofuels Corporation could recover.

“The Biofuels Corporation plant has been able to continue up to now in this difficult environment because of its scale and flexible technology, and given the increased commitments for biofuel use which are coming across Europe, should be able well placed to recover from any current difficulties,” he said.

“Other Neb members remain optimistic as is shown by the commissioning of the new capacity in bioethanol on Teesside and recent investments in other biodiesel plants.”

He added that Neb, along with the North-East Process Industries Cluster (Nepic) and regional development agency One North East, is continuing to work to attract investment to the area.

Ian Waller, managing director of consultants Five- BarGate and a recognised expert in the biofuels sector, said: “Nationally, companies in this sector are doing well, but that is not happening in the North-East at the minute.

“However, the industry certainly has a viable future, and I would hope the region’s sector can engage with the opportunities on offer to recover and progress.”

No one from Biofuels Corporation was available for comment yesterday.