Biodiesel Production & Sales
Production and Sales of Biodiesel
Biodiesel Production
In 2006, we built a 10,000 square meter biodiesel production facility with an annual design capacity of 100,000 tons in Tongchuan City, Shaanxi Province. Our achievable utilization rate, after taking into account national holidays and required periodic maintenance, is 90%. In October 2010, we acquired a 50,000-ton plant in Chongqing City, China. By the end of 2010, we will increase our total production capacity to 200,000 tons by constructing a new 50,000-ton production facility, adjacent to our 100,000-ton plant in Tongchuan City.
Biodiesel Facilities Photo Galleries
Click the images below to view photos of our biodiesel facilities.
Biodiesel Proprietary Production Technology
First Generation Technology
We have been awarded three patents relating to the use of multiple feedstock interchangeably in biodiesel production. Our biodiesel feedstock includes non-edible seed oil, waste cooking oil and vegetable oil residue, most of which have limited alternative uses. We have submitted eight additional patent applications, of which six have passed the preliminary examination and the other two have been accepted for review.
We maintain a flexible procurement model in which we adjust the relative quantities of each type of raw material we purchase, depending on their respective purchase prices, to minimize our raw material costs. In 2009, non-edible seed oil, vegetable oil residue and waste cooking oil accounted for approximately 40%, 43% and 17% of our raw material costs relating to our biodiesel production, respectively.
Our first-generation biodiesel meets the Chinese Biodiesel Standard B100. Our biodiesel can be blended with regular petro-diesel and used by existing diesel engines with no change in engine performance.
Second Generation Technology
The new 50,000-ton second-generation biodiesel production facility, adjacent to our 100,000-ton first-generation production facility, is estimated to reduce production costs by 20%. In addition to the feedstock used in the first-generation facility (i.e. non-edible seeds, waste cooking oil, vegetable oil residue), the new second-generation facility can utilize a diverse supply of raw materials, such as crop straw (wheat straw, corn straw, cotton straw, weed, etc.), agricultural waste (tree branches, tree leaves), as well as organic waste, providing us with better input cost controls while ensuring optimal capacity utilization.
Furthermore, the new technology is able to recycle unused feedstock and water used in the production process, meeting our environmental goals while delivering further cost reductions. China currently produces 1.3 billion tons in organic waste annually.
Our second-generation biodiesel meets Europe IV fuel standards and can be mixed with both diesel and first-generation biodiesel at any ratio.
Biodiesel Raw Material Supply
We have access to a range of biodiesel raw materials. Besides non-edible seed oil, we can also use waste cooking oil and vegetable oil residue for biodiesel production. We have signed raw material purchasing contracts with local associations, some of which are governmental entities. These associations organize local farmers to plant and harvest oil plants. The purchasing contracts obligate most of the associations to first offer to sell the feedstock to us.
Shaanxi Province is one of the largest cultivators of Chinese prickly ash, an oil plant, in China. Together, the local farmers in Shaanxi Province have planted approximately 240,000 acres of Chinese prickly ash, 857,000 acres of cornel, and 10,000 acres of Chinese pistache. Although we could satisfy all of our current feedstock demands solely with Chinese prickly ash, we continue to diversify our feedstock supply to lower input costs. The abundant supply of feedstock currently available in Shaanxi Province is sufficient for our current needs, and should be sufficient for our expanded demands for raw material once we expand our biodiesel production facility or acquire a new facility.
Biodiesel Sales and Marketing
We are the only non-state owned biodiesel producer with a nationwide distribution license. We continue to leverage our distribution infrastructure to sell our biodiesel to existing customers and to acquire new ones. The main advantages of biodiesel over petro-diesel are pricing, efficiency, safety (due to a higher flash point), and the fact that biodiesel is environmentally friendly. Our targeted markets are power plants, marine transportation companies, seaport operations, and other industrial customers which consume large volumes of diesel fuel.