Agribusiness

Ethanol mandate boosts bio-refinery demand for feedgrain on Darling Downs

Liz Wells, November 24, 2016
Legislation requiring Queensland's fuel industry to meet ethanol targets at the start of 2017 is already boosting the Dalby Bio-Refinery’s demand for feedgrains.

Legislation requiring Queensland’s fuel industry to meet ethanol targets at the start of 2017 is already boosting the Dalby Bio-Refinery’s demand for feedgrains.

 

LEGISLATION set to come into effect in Queensland at the start of the new year requiring the State’s fuel industry to meet its first ethanol target is already boosting the Dalby Bio-Refinery’s demand for feedgrains.

United Ethanol owns the facility, and company CEO Gavin Hughes said the mandate was expected to boost the plant’s feedgrain requirement to more than 200,000 tonnes.

“We’ll get through close to 180,000 tonnes this year, up from 140,000 tonnes last year, and we’re certainly seeing growth ahead of the mandate,” Mr Hughes said.

The legislation is due to come into effect on January 1, 2017, via the Liquid Fuel Supply (Ethanol and Other Biofuels Mandate) Amendment Act 2015.

It requires ethanol to make up a minimum three per cent of the total volume of regular unleaded petrol and ethanol-blended fuel sold by liable retailers.

The Dalby plant opened in 2008 and provides ethanol for United Petroleum as well as BP, Viva (Shell) and Puma.

Mr Hughes said the company has welcomed the mandate, which extended to lifting the ethanol component to 4pc as of July 1, 2018.

Switch to dry distillers’ grain

Until last year, the bio-refinery used sorghum as its feedstock to produce ethanol and its co-product, wet distillers grain (WDG).

But with a maximum shelf-life of around seven days, Mr Hughes said WDG had been hard to market on terms and at values its main market, beef feedlots, and the Dalby plant found mutually acceptable.

“What we used to sell was 70 per cent water and 30pc solids; since we’ve commissioned the dryer, we are now selling a product that’s 90pc solids and 10pc water, shelf-stable and GMO free.”

Known as dried distillers grain (DDG), Mr Hughes said the product is 38-40pc protein, which is comparable with cottonseed and canola meal, and well up on wheat DDG at around 26pc.

“We are the only people that make a high-protein meal out of sorghum in Australia. Our product is new into the market and we know we are operating in a competitive space.”

Barley joins sorghum in the mix

Mr Hughes said the price of feed barley had made it an economic addition to the bio-refinery’s feedstock.

“At the moment we’re processing up to 20pc barley. It improves the quality of the feed by changing the profile of the dried distillers’ grain.”

Pork industry a DDG customer

One of Australia’s largest pork producers, SunPork, has been sourcing DDG from the Dalby plant in recent months.

Animal nutritionist and SunPork CEO, Professor Robert van Barneveld, said the product was currently making up to 10pc of SunPork’s ration used to feed its 200,000 pigs in the district.

“We’re opportunistic users of lots of co-products, and if Dalby’s product fits in, we will use it willingly. We have been using it because the volume, consistency and cost effectiveness stack up at the moment,” Professor van Barneveld said.

DDG worth investment

Around 300 kilograms of DDG is produced from every tonne of grain used to make ethanol.

Mr Hughes said the production of DDG rather than WDG represented a $20m investment by United in a state-of-the-art dryer which did not denature proteins.

“It has certainly opened up markets for us since it started operation in March-April.”

He said other feedgrains such as wheat could also make their way into the bio-refinery’s feedstock.

“We put a blend in at the front end and process starch. That blend could be wheat, barley and sorghum. Traditionally, it’s been sorghum. It depends on the market.”

Beyond the Dalby operation, ethanol is made in Queensland at Wilmar’s plant in the Mackay region.

While other ethanol plants are on the drawing board or under construction, the Dalby Bio-Refinery is Queensland’s only inland manufacturer of biofuel and DDG.

Other sorghum markets

Southern Queensland’s key markets for sorghum are its own poultry sector, which takes around 300,000 tonnes per year, and China, where it is used to produce alcohol.

China is expected to take delivery of 450,000-500,000 tonnes of Queensland sorghum this year, down from around 750,000 tonnes last year.

The sale of DDG into China is currently seen as unfeasible because it would be competing in the Chinese domestic market against product made from Australian sorghum.

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