China Grand Forestry Resources acquires jatropha R&D company

The China Grand Forestry Resources Group will acquire Yunnan Shenyu New Energy, a research and development company that is prominent for its work on the jatropha curcus tree. The transaction is valued at $822 million in cash and securities. Yunnan Shenyu New Energy is currently constructing a jatropha plantation, crushing facility and a 30 Mgy biodiesel plant.

The Ministry of Finance recently finalized a farm subsidy plan for biofuels, which will take effect in 2008 and includes support for jatropha. Subsidies of $403.5 per hectare per year will be provided except for plantings in forested areas, which would receive $360 per hectare. The land used can only be land not intended for food crop use.

China is the third-largest ethanol producing nation, behind Brazil and the US.

Overall, jatropha cultivation will be expanded from 66,000 acres to 660,000 acres. The expansion is planned for Yunnan, Sichuan and Guizhou provinces, which have the most suitable climate for jatropha cultivation.

The expansion takes place under the auspices of China’s Green Poverty in Reduction program which was launched in 2006. The $8.5 billion project is a joint venture between the United Nations Development Programme (UNDP), China’s Ministry of Science and Technology and the Ministry of Commerce. The project aims to develop biofuels and other eco-friendly projects in China’s poorer western provinces.

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