THE future of Teesside’s biodiesel refinery - one of the largest in the world - looked unclear today as it emerged that the plant had shed staff.
The Biofuels Corporation, which has had a bumpy ride since opening in 2005, delisting from the Alternative Investment Market (AIM) and becoming 100% owned by Barclays in a debt-for-equity swap in 2007, said it could not comment on the circumstances surrounding the redundancies, but confirmed that the company was not in administration.
As recently as July, CEO Richard Nickels said output had increased and margins were improved after switching the multi-feedstock plant to running almost exclusively on used cooking oil (UCO).
However he remained unhappy about market conditions, despite a victory against the Americans in the bitter row over the so-called “splash and dash” policy that had seen millions of tonnes of heavily subsidised US fuel dumped in Europe, depressing prices.
European biodiesel output has struggled to recover, despite EU regulators slapping heavy tariffs on US biodiesel imports that had accounted for 20% of European consumption.
Officially, there have been no imports into the EU since the tariffs were imposed in March, but this summer the European Biodiesel Board said it had seen evidence of unusual trade patterns emerging between the US and Canada, and Canada and Europe, which could indicate that cheap fuel was coming into Britain by the back door.
Imports relabelled to hide their true origin could be referred to the EU’s anti-fraud squad, but such a move would risk another trade row with the States.
Dermot Roddy, chairman of North East Biofuels and energy professor at Newcastle University, said splash and dash wasn’t the only reason plants such as the Biofuels Corporation were suffering.
“The German Government removed a very generous tax break on biodiesel and we rely heavily on exports to Germany. The UK Government delayed by a number of years the targets for selling bio- diesel in the UK - that’s a thorn in the side of anyone trying to make money in this business.”
Together with what he called “undeserved bad publicity”, which pitched biofuels against food in a land use controversy that ran for several months, it had done nothing to steady investors’ nerves, said Mr Roddy.
He said the fact that the Biofuels Corporation had been running the plant on different feedstocks and well below capacity were all “warning signs”.
He added: “A business can only bear those costs for a certain amount of time. It’s a fantastic plant, one of the biggest in the world, but it’s very difficult to find anyone that can make money at the moment.”
However EU commitments had made the direction of travel for the biofuels industry very clear, he said.
“Long-term the market will come back, but that’s no help to people with cash flow problems now.”
Not a smooth ride for biofuels
THE Biofuels Corporation story so far...
May 2003: Biofuels Corporation first announces plans for a production plant on Teesside.
September 2003: Seal Sands is chosen as the site for the multi-million pound complex.
December 2003: A planning application submitted for the site.
June 2004: Plans to float on the Alternative Investment Market announced to generate £15m to fund the complex.
November 2004: Ground breaking for the site takes place.
February 2005: Delays in the building of an alternative fuel plant add £7m to the site’s £21m costs.
March 2005: Plans announced to raise a further £30m in a share offer to ensure the completion of the site.
September 2005: Biofuels Corporation confirms it will not meet its deadline to begin production at its site.
November 2005: Shares are temporarily suspended while discussions over funding with its bank take place. A finance rescue package is agreed the following month.
March 2006: With the site complete, the first biodiesel is produced.
July 2006: Prime Minster Tony Blair opens the site.
September 2006: Site is at almost full capacity.
January 2007: Biofuels Corporations’ shares fall to 27p - from a high of 216p a year earlier.
June 2007: The company says insolvency for the firm would be “unavoidable” if restructuring proposals are not approved by shareholders. This includes de-listing from the Alternative investment Market (AIM) and become 94% owned by Barclays Bank in a debt-for-equity swap.
July 2007: Shareholders vote in favour of restructuring.
August 2007: Biofuels Corporation de-lists from the stock market.
April 2008: The company says Europe needs to tackle the issue of subsidised US biodiesel flooding the market.
July 2009: After running substantially under capacity, the site says it had increased output.