FIRST In Spec (FIS) Biofuels will invest R1.5 billion in three biodiesel plants that will use wasted vegetable oil over the next four years.

Louis Nyiri, the managing director, said yesterday that two of these would be in Richards Bay while one would be in the Western Cape.

Nyiri said the company, which was established last year, would target primarily the mining, forestry, fisheries and agricultural industries because these sectors qualified for rebates and carbon credits if they used renewable energy and reduced carbon dioxide emissions.

Although South Africa is supposed to have a 2 percent blend of biofuels by 2013, private investors have been reluctant to invest money in the industry because the government has refused to create a mandatory market.

"Not having a mandatory market is a big issue for us as well. But we could not be bothered with the refineries at the moment because we will not have the capacity in any case.

"The 50 million litres that we will produce in Richards Bay will all be taken up by the mines," said Nyiri.

"Even if there was a mandatory market, we could not supply the refineries."

At present FIS Biofuels is finalising the funding structure for the first plant, which might be at the Richards Bay port or in the Richards Bay Industrial Development Zone.

Some of the money would be raised through debt while the rest would come from equity shareholders, who would mainly consist of political groups, which Nyiri refused to name as the deal had not been finalised.


The plant will be built by Desmet Ballestra, a joint venture of companies from Belgium and Italy. It will take a year to build overseas then it will be shipped to South Africa, where it will be erected by BSC Engineering next year.

The Richards Bay plant will cost R350 million and it will start operating in March 2011.

Llewellyn Whiting, the financial and procurement director at FIS Biofuels, said the company had already secured waste vegetable oil of 15 million litres a month from Canada, India and Australia, which was between 50c and 75c a litre cheaper than buying it locally.

Nyiri said another reason the company had opted to import the raw materials was because the quality was better.

"In South Africa, there is about 360 million litres of wasted vegetable oil but it ends up in the wrong industry. There are people who add Jik to it so that it looks like brand-new oil and they sell it in the rural areas. It also goes to the pet food industry as chicken and cow fodder, which then ends up on your own plate," said Nyiri.

Nyiri said this plant would create 100 direct jobs and 5 000 indirect jobs for local people.

The other two biodiesel plants would be built from 2012. They would have a capacity of 100 million litres a year each.

With the economy in recession, it should be a challenge to raise R1.5 billion. But Nyiri said he believed the company had a winning combination.