During the mining slump of the late 1990s, Darryl Butcher was looking for something to do. Although he had a successful career involved in mineral process development in the mining industry, to continue his work in mining he would have had to spend almost all his time overseas. “That wasn’t particularly attractive to me,” says Butcher. “So I looked around for something else.”

Kitchen table chemistry

He convinced himself of its viability after doing rudimentary tests of his own. “The first thing I did was make biodiesel in my kitchen at home with some cooking oil,” says Butcher, who was trained as an organic chemist. “The chemistry is not terribly complex. The detailed knowhow is in being able to consistently produce biodiesel that’s compliant with international or Australian standards.

” What grew out of an initial curiosity began to take shape and Butcher gained support from Amadeus Energy in 2001. Together they founded Australian Renewable Fuels and undertook a feasibility study of the technology available, conducting a global search which resulted in gaining an exclusive agreement with Austrian company Energea for the Australian region.

“The challenge was never going to be the technology,” says Butcher. “The challenge is in convincing people who are otherwise very sceptical. Only recently has there been growing acknowledgement that biodiesel will be part of the future fuel mix.

”However, Butcher and his team managed to persuade and educate the right stakeholders to turn his idea into a commercial reality. Australian Renewable Fuels listed on the Australian Stock Exchange in May 2005. The major shareholders are Amadeus Energy, SANT Super, and Butcher himself. There is also a range of institutional investors.

AThe company now has biodiesel plants indelaide in South Australia and Picton in Western Australia. Both are designed to produce 45 million litres of biodiesel every year at full capacity.

Butcher turns beef fat into biodiesel

Australian Renewable Fuels relies on tallow – beef fat typically sourced from abattoirs – to produce biodiesel fuel. According to Butcher, Australia produces about 600,000 tonnes of tallow each year.

Butcher says there is much potential beyond tallow.“We’ve been doing R&D for the past four years into oil seed crop development,” says Butcher, referring to the company’s funding of research through the South Australian Research and Development Institute (SARDI) into oil seed crops for biodiesels. “And now we are exploring the use of micro-algae as a future source of biofuels. The industry can get to a certain size on fats, but our growth and expansion beyond that will rely on an energy crop of some sort – canola, mustard, soy bean. It could revitalise the rural sector.

This concept means that we’re heading back to the idea of energy cropping,” he says. “What we’re offering farmers is actually an old concept. If you go back to the 1800s we had energy cropping – for example, castor oil and peanut crops that would be processed to provide industrial oil. Then the world discovered mineral oils and energy cropping died. Now we’re seeing a re-birth.

”The company hopes to develop three other plants around Australia and expand into the United States, where its subsidiary has the right to implement the Energea technology. It can also build plants in Europe, under a licence agreement. “The US and European expansion is an exciting story,” says Butcher. “There is a very ready market there for a group with our experience.

”Butcher also cites the United States Government’s bi-partisan support of the development of biofuels as a clear signal that the market is ready. “There is significant support by way of subsidies at Federal and State levels,” he says. “There is also clear bi-partisan support in Europe for biofuels.”

Regulatory obstacles

However, Butcher flags the Australian Government announcements made in 2006 – which he says have effectively removed the producer grant introduced to encourage the establishment of a biofuels industry – as a backward step for the industry. “In the short term, we do need some assistance to develop a strong industry and that was possible under the previous legislative regime,” says Butcher of the legislative change, which affects many biodiesel producers in Australia. “We were offered a level playing field in the consuming market, but that has been materially changed.

”Butcher says it creates problems at an investor level – the company’s share price halved following the announcement. “When we listed we had a market capitalisation of A$108 million. Prior to the announcement that had grown to A$280 million and we were looking at being an ASX 200 company. After the changes were announced, A$150 million was wiped off shareholder values.

” Nevertheless, Butcher says the company is working its way around the new regulations and has adapted its business and marketing strategies. “If we had known how the rules were going to be changed, we would have structured the business differently,” says Butcher.

But he still remains optimistic.“We have an operating base in Australia and we will make Australia work. However, it’s true that there are now better markets overseas.”