Lutho Mtongana
(Bloomberg) — PhytoEnergy International Holding AG said it will only proceed with a plan to build a 5 billion rand ($418 million) plant to convert canola into diesel in South Africa if the government passes laws needed by the industry.
- Photo credit: HaraWish / Foter / CC BY-NC-ND
The plant, which will produce 400,000 metric tons of diesel a year, when complete, could start output in the third quarter of 2017 if the South African government passes planned laws mandating the blending of biofuels into motor fuel. While the laws are supposed to come into effect on Oct. 1 this year the government has yet to take the necessary step of publishing a position paper, Herisau, Switzerland-based PhytoEnergy said.
“The government keeps on postponing the final regulation and thereby endangers the whole biofuel industry,” Petrus Fouche, chief operating officer of a South African unit of PhytoEnergy, said by e-mail on Tuesday.
The plant will need about 1.1 million tons of canola a year, according to Wandile Sihlobo, an economist at Pretoria- based Grain SA, the country’s biggest grain farmers association. That’s nine times South Africa’s production of 123,500 tons of the crop last year, all of which was consumed by the food industry. Canola is used in margarine and as a vegetable oil.
While 95,000 hectares (234,745 acres) of the crop was planted last year an additional 500,000 hectares would need to be grown during winter in provinces including Eastern Cape, KwaZulu-Natal and the Free State, Fouche said.
“It is unlikely that our government will not pass the final regulations as it’s a mega-project for them in the supply of job opportunities,” he said. “If there are ongoing delays from government we will have to abandon the idea of processing canola to biodiesel.”
