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Feb 13 2012 12:15
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The business plan of biodiesel group De Beers Fuel, which has already sold 27 franchises and 40m shares to the public, rests on technology that hasn't yet seen its economic viability being commercially proven.
The franchises were sold at R6m each, which includes the reactor and personnel training. The shares were sold to the public at between 20c and R1,50 - without a prospectus.
De Beers Fuel is currently running only a research plant at Mookgopong (Naboomspruit) and plans to complete the first four commercial biodiesel plants within the next six to eight weeks. It guarantees that every reactor - 90 have been ordered already - can produce 38,4m litres/year of biodiesel.
The plants will initially use traditional raw materials, such as sunflower oil, which is imported. The business plan is based on the plants switching to algae oil within the next 18 months to two years.
De Beers Fuel has already obtained a licence from GreenFuel Technologies in the United States for the use of its technology for algae production.
Two years before commercialisation
Though the technology has already progressed from the laboratory "it will be another two years before it's commercialised", GreenFuel says.
So far there's no large-scale commercial production of algae biofuel anywhere worldwide and its economic viability on such a scale hasn't yet been proved.
GreenFuel's technology pumps the carbon dioxide produced by power stations into a bioreactor in which the algae grows. The oil pressed from the algae is used as a raw material to produce biodiesel.
GreenFuel last year won two prestigious awards for its "innovative technology that can make a significant contribution to the industry". The US Department of Energy conducted research between 1978 and 1996 to test the viability of algae biodiesel.
The conclusion was that algae must be grown in bioreactors to obtain sufficient production but that process was too expensive to regard algae as a viable alternative to traditional raw materials.
Capital intensive
Hendy Schoonbee, an adviser to the De Beers Fuel board, admits that the bioreactor process is "tremendously capital intensive".
He cites the test run that GreenFuel conducted at Redhawk Power Station in Arizona as proof that the technology is in fact viable.
The Arizona project, which was completed in November 2006, was the first test outside the laboratory where the technology's scientific success was shown. It took 18 months.
The construction of an engineering scale unit - a small version of a commercial bioreactor - is currently being completed at Redhawk. Similar tests must still be conducted at Kelvin Power Station, north-east of Johannesburg, to determine the correct conditions for SA.
Perfect conditions
For sufficient algae production the conditions in the bioreactor must be just about perfect in terms of temperature, amount of sunlight, nutrients and carbon dioxide.
An acre (around half a rugby field) of algae can produce 40 000 litres of bio-diesel from the algae oil and 50 000 litres of ethanol from the waste algae, Schoonbee says. However, an acre of sunflower produces only 350 litres of biodiesel.
The British bio-diesel industry is currently under pressure, as the cost of raw materials makes the process too expensive to compete against ordinary diesel.
"If it's so easy to use algae, don't you think we'd all be doing it," asks a large bio-diesel manufacturer in Britain.
De Beers Fuel is one of a handful of companies that have so far signed agreements with GreenFuel.