singapore production

Just to put things into perspective, I've done a few quick calculations to show what the production from the upcoming plants in Singapore represents.

I saw the other day that the total amount of fuel used in Australia per year is 29 billion litres. Now assume that about 50% of this total, or about 14 billion litres, is diesel.

Singapore is about to commission 3 x 200,000MTPA plants. This is equivalent to about 680 million litres of Biodiesel which is about 5% of the diesel currently being used per year in Australia.

Australia could go to B5, that is Diesel with 5% biofuel in it just from NFL's plants in Singapore.

And if you look at their planned future production they have allowed for an additional 6 x 300,000MTPA plants. This would increase production by a factor of 4.

Australia could go to B20, that is Diesel with 20% biofuel in in from NFL's plants in Singapore in the next 3 - 5 years.

It is almost as though NFL looked at the Australian market for Diesel and built the plant to suit that market ... then realised the $US1 a US gallon subsidy in the US was the way to go.


But we won't ... and why ... because Australia has no mandatory targets for the use of Biodiesel so almost all the Biodiesel manufactured in NFL's Singapore Plants is due to be shipped to the US.

So how does Australia value a Biofuel company that will be producing about $750 million worth of Biodiesel a year next year and possibly $3 billion worth of Biodiesel a year in the next 3 - 5 years.

Current share price about 26 cents, so market capitalisation is about $90 million down from a market capitalisation of about $500 million when the company was floated.

Share price seems unlikely to move much before they start getting good production out of Singapore early in the new year.


Notes:

(1) B5 and B20 are currently European Biofuel standards
(2) 3 -5 years is John Hewson's estimate of when NFL will be hitting it's peak so I'm assuming that is when the expansion will be complete. (Listen to his announcement)
(2) B1 and B2 are "Bananas in Pyjamas"