I note Indonesia are introducing mandatory biofuel...

I note Indonesia are introducing mandatory biofuel use.

http://www.businessspectator.com.au/bs.nsf/Article/Indonesia-to-impose-mandatory-biodiesel-use-in-200-JUCUG?OpenDocument&src=srch

In checking the current Palm Oil prices I got side tracked to an Australian plantation seed producer's web site.

http://www.palmplantations.com.au/oil-palm-trees.htm

It was interesting because it is an example of how oil seed productivity per ha can be increased over time with the right plantings. This means oil seed production can be increased without trashing more rain forests or taking over other food crop land.

If there is enough sustainable seed oil (Palm or Jatropha) being produced and priced appropriately, I see no reason why large scale biodiesel refineries won't be sitting pretty in the near future.

I assume NFL are currently negotiating various supply and offtake agreements. Once the required margins go green in their spreadsheets, deals can be done and tolling production can begin in Singapore - the oil hub of Asia.

My understanding is NFL is currently priced at a discount to the asset value of Singapore. From memory, the recent independant experts valuation came in around 11-13 cents based on the replacement cost of the plant.

A director has recently increased his investment at 13cents as part of thier capital raising exercise back in June 2008.

In a Board Room Radio interview with Dick Selwood,

http://www.brr.com.au/event/46585/aim-leading-global-player-in-biodiesel--glycerine

... Dick hightled that they have fixed costs of approx $25m pa and that they expect the current Glycerine refining strategy will over a year cover their fixed costs. Refining biodiesel will be the bonus and they won't have to buy raw glycerine. Dick also comments that he believes the company is in much better shape than the share market gives them credit for. He expects that "in the not too distant future, the market will actually take an active interest in us".

I guess Dick means that if they can get biodiesel production up an running, the valuation will change from discount to NTA, to something relating to profit and growth and the market will take an active interest in that paridigm shift.

Any comments?