IBI Acquires Share in Jatropha Production

The agreement with SCA includes preference in its supply of jatropha oil at prices below soybean oil, giving IBI a competitive advantage in its biodiesel production costs.

Jatropha is a small tree native to Central America which delivers seeds with high oil content suitable for low-cost biodiesel production. It will grow on degraded arid land and produce for 30 years without replanting. Considered the new promise in biodiesel feedstock, jatropha oil will not compete with edible oil production and is being developed by several biofuel companies around the world.

This deal is strategically important for South Cone as it is launching an effort to raise capital in Europe through private placement of stock with selected investors. Funds will be used to deploy commercial plantations in Angola, Brazil and Argentina, where SCA is acquiring and leasing land. "The agreement with IBI advances our development process," says Ian Cavanaugh, South Cone's president.

South Cone is focused on jatropha plantations but also develops short rotation crops such as sunflower, crambe and castor to secure ongoing revenue stream. "South Cone will post profits in year one as opposed to other developers which will burn money for 3 to 4 years," adds Cavanaugh, eyeing the initial harvests by late 2008.

"SCA is the 21st century's oil exploration company; it's really the vision of modern energy. We feel very confident that this strategic investment will improve our competitive position for years to come," states Marcelo Lopes, IBI's Chief Executive Officer.

IBI will reach a production capacity of 135,000 metric tons per year in 12 months in its Argentinian plants and requires alternative feed-stocks to reduce its dependence on soybean oil. The company will also establish modular plants near SCA's plantation sites in other countries.

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