THE company building the world's largest biodiesel plant said last night that crisis talks with funders were continuing.

The Biofuels Corporation, which is building the plant on Teesside, announced last week that it had suspended the trading of its shares on London's junior stock market while it negotiated with Barclays and equity backers about its borrowing facilities.

The future of its completed £21m alternative fuels plant, at Seal Sands, near Billingham, and of 40 staff, hangs in the balance.

The plant, which mixes palm or rapeseed oil with diesel, has not been commissioned.

Delays are believed to have led to extra costs.

The company has warned that its future depends on the outcome of the talks.

Biofuels, which was set up by Australian businessmen John Nicholas and Max de Grussa, raised £15m with its initial flotation on the Alternative Investment Market (AIM) last year.

Barclays backed the company with £17m. Biofuels was also offered a grant by regional development agency One NorthEast to go towards the construction of two plants on Teesside, though it has not yet drawn the money.

A spokesman for Biofuels confirmed that talks were continuing, and that an announcement would be made in due course.