Redundancies at Teesside’s biodiesel refinery

Nov 18 2009 by Sue Scott, Evening Gazette

THE future of Teesside’s biodiesel refinery - one of the largest in the world - looked unclear today as it emerged that the plant had shed staff.

The Biofuels Corporation, which has had a bumpy ride since opening in 2005, delisting from the Alternative Investment Market (AIM) and becoming 100% owned by Barclays in a debt-for-equity swap in 2007, said it could not comment on the circumstances surrounding the redundancies, but confirmed that the company was not in administration.

As recently as July, CEO Richard Nickels said output had increased and margins were improved after switching the multi-feedstock plant to running almost exclusively on used cooking oil (UCO).

However he remained unhappy about market conditions, despite a victory against the Americans in the bitter row over the so-called “splash and dash” policy that had seen millions of tonnes of heavily subsidised US fuel dumped in Europe, depressing prices.

European biodiesel output has struggled to recover, despite EU regulators slapping heavy tariffs on US biodiesel imports that had accounted for 20% of European consumption.

Officially, there have been no imports into the EU since the tariffs were imposed in March, but this summer the European Biodiesel Board said it had seen evidence of unusual trade patterns emerging between the US and Canada, and Canada and Europe, which could indicate that cheap fuel was coming into Britain by the back door.

Imports relabelled to hide their true origin could be referred to the EU’s anti-fraud squad, but such a move would risk another trade row with the States.

Dermot Roddy, chairman of North East Biofuels and energy professor at Newcastle University, said splash and dash wasn’t the only reason plants such as the Biofuels Corporation were suffering.

“The German Government removed a very generous tax break on biodiesel and we rely heavily on exports to Germany. The UK Government delayed by a number of years the targets for selling bio- diesel in the UK - that’s a thorn in the side of anyone trying to make money in this business.”

Together with what he called “undeserved bad publicity”, which pitched biofuels against food in a land use controversy that ran for several months, it had done nothing to steady investors’ nerves, said Mr Roddy.

He said the fact that the Biofuels Corporation had been running the plant on different feedstocks and well below capacity were all “warning signs”.

He added: “A business can only bear those costs for a certain amount of time. It’s a fantastic plant, one of the biggest in the world, but it’s very difficult to find anyone that can make money at the moment.”

However EU commitments had made the direction of travel for the biofuels industry very clear, he said.

“Long-term the market will come back, but that’s no help to people with cash flow problems now.”