Mission Biofuels plans to enter the Chinese biodiesel market through landmark production and off-take agreements.

The company expects the China operations to generate immediate revenue and profits through a variety of means including revenues are predicted in July, three months ahead of schedule due to the China production agreement with East River Energy Resources and Science Technology (Zhejiang) Ltd (ER) , a new biodiesel producer in China; significant off-take agreements have been proposed with Wuhan PetroChina Lubricant Co Ltd (Wuhan PetroChina), part of the PetroChina Group of companies, China"s largest producer and importer of oil; global feedstock and biodiesel ‘soil-to-oil" production strategy is on track

Mission has signed a Memorandum of Understanding (MoU) for a joint venture production contract with East River Energy Resources and Science Technology (Zhejiang) Ltd ("ER").

ER will commission a 50,000 tpa biodiesel manufacturing facility at Tongxiang, about 140km from Shanghai, which Mission Biofuels will use to produce biodiesel to be sold into the booming Chinese market.

ER and Mission have agreed to replace the MoU with a definitive agreement within 90 days. 

Mssion has also signed a letter of intent with Wuhan PetroChina Lubricant Co Ltd (Wuhan PetroChina), to be replaced by a definitive agreement within 90 days. Wuhan PetroChina, which is part of the PetroChina group of companies, markets refined oil products to gas stations, wholesalers and distributors. PetroChina is China's national oil company and is the largest producer and importer of oil in China with more than 12,000 filling stations throughout China.

Through its Indian and Malaysian subsidiaries, Mission Biofuels will secure supply of cheap edible and non-edible and sustainable feedstock from South Asia and South East Asia that ER will use to produce biodiesel. The biodiesel produced will conform to the proposed draft Chinese Biodiesel standard. Mission has already provided ER with samples of certain edible and non-edible feedstock which has been successfully lab tested by ER.

Mission Biofuels Managing director Nathan Mahalingam says: "This is an excellent development for the company and a very pleasing start for our business in China."

The expected production throughput is 24,000 tonnes in the first year and ER is agreeable to expand its capacity, at its own cost, to cater for another 50,000 tonnes/year exclusively for Mission Biofuels. Should Mission Biofuels give the go ahead, ER has indicated that this additional capacity will be ready for Mission Biofuels within nine months.

"We intend to move quickly to take advantage of this and increase throughput to over 70,000 tonnes/year in 2008/2009. China is going to be a huge market as it  is heavily reliant on diesel, consuming about 82 million tonnes in 2005 and this is expected to increase to 110 million tonnes in 2010.

"A 5% biodiesel use will see a potential market of over 5 million tonnes developing while current biodiesel production is less that 200,000 tonnes/year." he says.