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Business Daily (Nairobi)

Mali: Country Leads the Pack in Biodiesel Production

Dominique Patton

29 October 2007

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A Dutch-backed start-up in Mali could be the first in Africa to produce biodiesel from jatropha on an industrial scale.

Proponents of the plan say it is likely to become a model for biodiesel production on the continent, if it succeeds.

Mali Biocarburant is ahead of other companies in the race to produce fuel from jatropha because it is not relying on new plantations to source its raw material.

Instead it is buying up jatropha nuts already available from the estimated 20,000km of living jatropha fences that cover Mali, used by farmers to protect other crops and stop soil erosion. The firm is also giving farmers seeds to increase crop output for the future.

"It's a big risk but we believe we have the right set-up. In one year's time, I will be able to say if my business model works out. And if it does, it will be really revolutionary for Africa," says chief executive of the firm Hugo Verkuijl.

With oil trading at more than $90 a barrel, the potential to extract alternative fuel out of the oily jatropha plant is highly attractive, especially for non-oil producing countries like Mali and Kenya. But with no firms yet at production stage of this novel fuel, the jury is still out on the best route to market.

Mr Verkuijl admits that under his business model, the logistics and supply chain will be a major challenge. While processing jatropha nut oil into biofuel does not require advanced technology, there must be a ready supply of jatropha nuts with a high enough oil content to embark on significant production.

But by bringing farmers on board as owners, he hopes to guarantee a steady supply.

"It's important to make sure that farmers are selling the nuts to my company. By making them shareholders and showing that it pays dividends, we can make it work."

Mali Biocarburant also has financial backing from the Dutch government, the tropical institute KIT and investors like SPF, a major pension fund of the public railways in Holland.

Rather than setting up large plantations, the venture is promoting jatropha as a means of diversification for farmers, encouraging its integration alongside millet, sorghum or maize. It has grown an additional 600 hectares since the start of the year, with about two thirds intercropped with local food crops.

This kind of intercropping has been used in Mali for more than 20 years. But the area planted is far from the thousands of hectares being freshly planted by large-scale firms in other countries.

"If you have to own the land yourself as a foreign company, that's a very big risk. In our case, the only risk is that farmers have a bit less land available. We pay for the seeds," says Mr Verkuijl.

Plantations would not only mean lesser financial benefits for farmers, but they could also lead to an invasion of agricultural land, putting food security at risk, he adds.

Biodiesel rich nuts

This would compromise the single most important characteristic of jatropha for African biofuel producers. The plant's ability to grow on wasteland, rather than requiring fertile land, has been lauded by environmentalists, keen to limit the impact of other biofuels such as corn-derived ethanol on rising food prices.

This in turn has triggered investment in jatropha plantations. But some say that large companies' desire to enhance output of the crop may drive them onto more fertile land. While jatropha does not need much water, it does much better when it has some.

The Dutch venture also wants to keep profits from the biodiesel, including the carbon credits it generates, inside Mali. "I believe in small-scale, decentralised biodiesel plants, where there is local production of jatropha nuts to minimise transport. I will be producing for Mali and not exporting to Europe. I don't need to contribute to the already high GDPs in Europe," says Mr Verkuijl.

The first test runs of Mali Biocarburant's small-scale biodiesel plants will take place in January 2008. Samples of its biodiesel have been tested in German labs with high standards and are found to be "almost comparable to ordinary diesel", according to Mr Verkuijl.

He is aiming to produce about 6 million litres of biofuel in Mali in five years time.

There is still a lot of uncertainty about the project's viability.

"It's a new market and a new crop and refining jatropha oil to biodisesel has not been done on commercial scale anywhere. The challenge will be to extract the oil at a profitable rate," says Mr Verkuijl.

Currently the nuts being produced in Mali have an oil content of 35-36 per cent and an extraction rate of 30 per cent per kilo.

Mr Verkuijl's business plan says he can achieve profits at this level but the large companies like D1Oils setting up plantations in other parts of the continent are investing in sophisticated breeding science and crop management to improve overall ouput before starting biofuel production.

"You can get higher yields but when you work with farmers you need to be realistic about their opportunities. A farmer doesn't have the money to invest in water, irrigation and fertiliser."

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