Majority owners offer to take Australia’s BEI private, after collapse of Aussie biodiesel industry drives share values to the floor

In Australia, investment and advisory firm Babcock & Brown has offered to take Babcock & Brown Environmental Investments private, after the biofuels producer cancelled plans for development of a plant near Darwin and was forced to consider selling its stake in Natural Fuel Australia at a substantial loss. The company’s shares had dropped from a high of $3.45 in May 2006 to $0.38, but recovered to $0.47 on the announcement. Babcock & Brown owns 70 percent of BEI and floated the remaining 30 percent in a public offering in 1998.

Last week, the last biodiesel plants in operation in Australia closed down due to excessive feedstock costs and low biodiesel prices. The Australian Renewable Fuels tallow-based biodiesel plants in Bunbury and Adelaide were the last biodiesel facilities in the country, according to the company’s owners.

The decision follows closures and project halts on Australian ethanol plants by Agri Energy. That company’s CEO said that “The decision to put on hold any further development in the Australian biofuels industry is a result of current global biofuels market outlook, reflecting ongoing high feedstock prices and continued uncertainty from the investment community, government and community support for alternative transport fuels in Australia.”

Last month, a $30 million biodiesel plant in Port Botany was opposed by the Green Party for proposing the use of Indonesian and Malaysian palm oil. However, the Queensland government has approved a 40 Mgy biodiesel plant that will be constructed at Mackay; the plant will be operated by the Mackay Port Authority and begin production in 2008.

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