Anglo-US venture to build £200-million biofuel plant in the UK

26 June 2007

Associated British Foods plc (AB), the international food, ingredients and retail group today announced its having reached an agreement with BP and DuPont to invest in building a world-scale biofuel plant in the UK.

The three companies, all leaders in their businesses, will form a joint venture, subject to regulatory approval, to build the plant and operate the business. ABF and BP will each hold 45 per cent of the joint venture and DuPont will hold the remaining 10 per cent

The plant will produce bioethanol from wheat and will be built at a cost of £200 million at BP''s chemicals site at Saltend, Hull. Its capacity will be 420 million litres (330,000 tonnes) of bioethanol per year and is planned to come on stream in late 2009.

ABF expects a return on its investment ahead of its cost of capital in the first full year of operation.

The plant will initially produce bioethanol, but the partners will look at the feasibility of converting it to biobutanol once the technology is available. BP and DuPont intend to build a jointly funded biobutanol demonstration plant, which will run in parallel with the main plant, to support this objective.

It is expected that formal agreements will be entered into by the joint venture, after its formation, with other ABF businesses, Frontier Agriculture and AB Agri. The supply of locally grown wheat would be arranged by Frontier, which is the UK''s leading grain marketer and supplier of agricultural inputs.