singapore

I really think that I should spend a bit of time explaining some details about the NFL operation in Singapore. Of course if people could be bothered actually reading all of the NFL prospectus themselves, doing some research, and thinking what it means, this probably wouldn't be necessary.

The first thing to consider is the size of the worldwide Diesel market. It is about 600 Million Tonnes per annum. The current supply of Biodiesel is about 8 Million Tonnes. Clearly there is a long way to go before we reach a "saturation" level.

As for where this BioDiesel is currently produced, the EU accounts for 66% of the production with Germany currently being the #1 producer. Australia currently has no mandatory targets at either a State Level or a National Level for BioDiesel. The EU has a target of 5.75% BioDiesel by 2010.

And as for the Vegetable Oils markets, we are currently producing about 120 Million Tonnes per annum. It is clear that even in the next 50 years we are unlikely to be able to produce enough Vegetable Oil to make all Diesel BioDiesel, B5 and B20 are much more likely to be the standards which evolve.

As far as Palm Oils are concerned, Malaysia and Indonesia are the main producers, and they have tripled their production in the last 20 years to 32 Million Tonnese which will rise to 38 Million Tonnes by 2010. Malaysia and Indonesia are setting aside 6 Million Tonnes of Palm Oil every year for the production of BioDiesel. It is fair to assume that there is going to be no shortage of Palm Oil for BioDiesel in the near future.

Historically pricing of Palm Oil has been about $US150 Tonne less than other Vegetable Oils. This is unlikely to change in the future and even when you consider that it is going to cost $35 Tonne to ship the BioDiesel from Singapore to the US we still seem to be ahead.

One VERY important point to note in the prospectus is that the BioDiesel produced in Singapore is destined for the US. In the US there is currently a grant of $US1 a USgallon for BioDiesel. It would be impossible to run a BioDiesel plant at a profit without this allowance. This is equivalent to $US180M if all the output from Singapore was shipped to the US.

The Natural Fuels Prospectus claimed they would be making $119M in the 2007/2008 financial year based on a Palm Oil price of $US495 Tonne. The Palm Oil price has increased, of course, but their figures showed that with a +10% increase in the price of Palm Oil, the profit would drop to $88M. We can conclude from this that the breakeven point is at a Palm Oil price of around $US700 Tonne.

But that result must be balanced against the fact that $US55 BBL was used in their calculations. Given a +10% increase in the price of crude oil they claimed an extra $50M profit.

Another figure to take into account is the costs of a delay to the project. A 3 month delay would reduce the profit in the 2007/2008 financial year by $40M but it should be realised that this is based on them making $40M in a quarter anyway.

And are they behind schedule? No if you read the latest announcement by their publicity people, but Yes if you read the prospectus and see that they were planning to produce 120 ML BioDiesel from the Singapore Plant before the end of this year.

Another minor consideration is that they are planning to produce "Pharmaceutical Grade Glycerine". As this is worth about $US200 Tonne more than standard Gylcerine, this means that they will be making an extra $US12 Million. (Based on 60,000 TPA)

Footnote: The 3 200,000 TPA BioDiesel Plants in Singapore will produce 680,000,000 Litres BioDiesel. I believe this is about 5 Million BBL