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Algae.Tec accelerates expansion, to build first biofuels facility in China


Algae.Tec (ASX: AEB) has signed a binding memorandum of understanding for a 50:50 equity joint venture in China with Shandong Kerui Group Holding to build the first biofuels and carbon capture facility in China.

Algae.Tec executive chairman Roger Stroud said, importantly, Shandong would be putting half the equity into the project, which shows very strong commitment to the project on their part.

“China is a country focused on a ‘blue skies’ policy. This JV has been formed to help China move towards this important goal,” he said.

“The Algae.Tec technology will reduce unwanted emissions and will convert them into locally produced transport fuels which will add to fuel independence.”

China is targeting pollution and carbon as part of its current five year plan from 2011-2015 with a pledge to reduce the amount of carbon emitted per unit of gross domestic product by 40% by 2020.

The 250-module biofuels facility will be built in Dongying, in Shandong Province, and will produce about 33 million litres of algae derived transport oil and 33,000 tonnes of biomass per annum at a combined value of over $40 million.

It will capture 137,000 tonnes of waste carbon dioxide.

Stroud said this facility will be the first of many. The joint venture will accelerate the Algae.Tec project expansion and roll-out throughout China, targeting corporations and environmental authorities.

The joint venture will also look to secure funding, following completion of the 250-module plant to build new projects exceeding 1,000 modules and engage with carbon dioxide emitters in the greater China region.

Capital Raising

Patersons Securities will aim to place 12.5 million shares at A$0.40 each to sophisticated and professional investors to raise $5 million. This will fund the fast tracking of Algae.Tec's recently announced commercial projects.

The raising is expected to be completed in three days.

The company will also issue attaching options on the basis of one option for every two shares subscribed. The options will be American options with an exercise price of $0.75 and a maturity date of 31 January 2014.

Last week Algae.Tec announced the four-fold expansion of its Atlanta, Georgia-based Algae Development and Manufacturing Centre to 70,000 square feet to scale up production line capability for existing and upcoming commercial projects.

Forward Plans

Stroud told Proactive Investors today Agae.Tec is looking into entering global alliances.

“We intend to continue to talk to groups about offtake agreements, about supply and obviously more joint venture arrangements of a country-wide nature,” he said. 

“In other words, with China, this joint venture is with the group for the whole of China. So we will want to do the same thing in the U.S., the same thing in Australia and the same thing in Brazil.”

Last month Algae.Tec signed a biofuels memorandum of understanding with the European airline Lufthansa, and announced a biofuels production and carbon capture deal with the Sri Lanka subsidiary of industrial giant Holcim.

The Algae.Tec solution is less than one tenth the land footprint of pond growth options, while its enclosed module system is designed to produce algae biomass in virtually any environment.

The system is designed to deliver the highest yield of algae per hectare and, importantly, does not require the use of food producing land for biofuel production.

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