4 Apr 2014

Z Energy confident on biodiesel

6:57 am on 4 April 2014

Z Energy is confident its biodiesel plant will succeed, despite others having failed.

Its plant in Wiri near Auckland, which is expected to be up and running in about 14 months, will cost $21 million and initially produce 20 million litres of biodiesel a year.

Z Energy says if demand proves sufficient, it can double this capacity for a further investment of $2.5 million.

The petrol station operator says its feedstock will be about 10 percent of the inedible tallow produced by the meat industry, which is currently exported to China and India to make soap and candles.

The company says it already has letters of intent from potential customers - most of the initial production will be sold to commercial customers rather than through Z's retail network.

Chief executive Mike Bennetts says Z is very close to being able to start building the plant and it should be operating within about 14 months.

It will probably be the world's first such commercial plant which isn't subsidised by governments.

Mr Bennetts says the pure biodiesel will be blended with mineral diesel at the rate of one part biodiesel to 20 parts mineral diesel because that's the level at which vehicle manufacturers continue to support the warranty on their cars.

The company has also re-affirmed its previous full-year guidance that operating profit will be between $205 million and $215 million, up from $196 million the previous year.

An artist's impression of Z Energy's proposed biofuels plant at Wiri.

An artist's impression of Z Energy's proposed biofuels plant at Wiri. Photo: Supplied