jatropha supply from gem deal finalised

NFL finally confirms their agreement with GEM Bio Fuels has been signed.

"Natural Fuel Limited (ASX: NFL) is pleased to announce that it has completed the Long-term Off-take Agreement with GEM BioFuels Plc (GEM) for the supply of crude jatropha oil as a feedstock for its Singapore biodiesel facility.

The supply of the crude jatropha oil will commence in early 2009 at a free on board delivery price of US$500 per tonne, adjusted for inflation, for the first five years of the 10 year agreement. GEM will initially supply NFL with 2.5% of its Singapore facility production requirements, with supply increasing year on year as its jatropha plantation program in Madagascar develops. By 2013, 55% of GEM’s jatropha production will be provided to NFL, equivalent to 25% of the Singapore plant’s overall feedstock requirements.

Mr Michael Pixley, NFL Deputy CEO said: “This GEM Agreement is the first in a series of alternative feedstock deals that the Company is negotiating in order to secure a diversified feedstock supply position.

“In line with the Company’s Asset Utilisation Strategy, NFL is focused on locking in supply agreements on a range of feedstock alternatives to palm oil, which is currently at record high prices.

By securing diversified feedstock supply, NFL can mitigate risk and ultimately deliver greater operating profits,” he said.

Mr Paul Benetti, GEM BioFuels CEO said: “ “We are pleased to have signed this agreement with Natural Fuel which cements a constant demand for the term of the Agreement and highlights the incentive for purchasers of jatropha oil in securing the supply of biodiesel feedstocks at agreed prices, an agreement which benefits both the purchaser and supplier therein.”

“When GEM’s current jatropha plantation program reaches maturity in late 2013 and the Company begins producing at full capacity, it will supply NFL with 25% of Singapore’s feedstock requirements,”said Mr Benetti.

NFL’s biodiesel plants are designed to use a broad variety of virgin vegetable oils as feedstock, providing significant flexibility in feedstock sourcing and blending. Jatropha oil produces high quality biodiesel with superior cold flow properties, allowing NFL to blend it with palm oil and achieve cool weather biodiesel."