Australia's largest biodiesel producer, Australian Biodiesel Group, has announced that it is looking to raise AUD$15.9 million (US$12.4 million) to launch a new business plan after a difficult year in 2006. The money will be via a rights issue at 5c per share which values the company significantly below its current share price.

Changes to the Australian biodiesel market, including biofuels legislation, negatively impacted the company during 2006, which is now positioning itself to expand into North America where it is believed profits will be easy to come by. The biodiesel market has rapidly grown over the last three years in the U.S. on the back of rising oil prices, federal incentives and state based support of biofuels.

Analysis: A crippling drought and federal biodiesel incentives that are being phased out virtually before the industry has established itself in Australia have made it tough on the local producers. Expansion into the booming U.S. market is a good option, but what ABG are really praying for is for the drought to end and oil prices to go back up to last year's record highs.

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[Source: Egoli]

A drought in Australia will have dire consequences soon for Australian Biodiesel Group, which is predicting a net loss of AU$10.8 million. The drought is affecting the availability of canola and other oils. Combine this drop in supply with a fall in the price of diesel and you've got the makings of a problem. Aust Biodiesel's September sales were at record highs, but lower than they could have been had the company been able to secure more biomass stock and deal with production issues. The company says it has a supply of feedstock that will last for the next four months. But after that?

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• Turning mustard seed to biodiesel in Australia

[Source: News.com.au]