It is good news from ARF (ARW) and FMG. ARF is a much smaller operation than NFL. NFL also don't have a working plant in OZ (it is now in Administration). Supply to FMG would be small scale.
NFL is a large scale operation. They won't be able to do small tactical deals (unless they get enough of them). NFL needs to operate a "train" at a certain capacity before it is worth their while.
NFLs business model will work well when Oil majors operating out of Singapore require biodiesel blending. They just turn the tap on to the appropriate level and blend with other diesel supplies.
Government biodiesel mandates would help stimulate demand. Carbon trading will also help. The final Garnaut report is out tomorrow. ETS will encourage businesses to lower their carbon emissions through the use of biodiesel blends. At the moment, there isn't a lot of incentive to use biodiesel.
Once NFL is producing, I would expect it to be able to operate at a lower point of the cost curve.
NFL have said they are monitoring palm oil pricing on a day-to-day basis. They would be looking for price stability. If they start too early, they could get caught out. They would want to be sure there isn't a false start to Singapore operations.
I really hope there is light at the end of the tunnel. If their business plan gets back on track, it will be a great story of persistance through very difficult/unpredictable times.
BGC Price at posting:
9.1¢ Sentiment: Hold Disclosure: Held
