French agro-industrial group Avril plans to stop using imported palm oil as it attempts to turn around its loss-making biodiesel division, and may sell two of its production sites.
Avril’s Saipol unit, which produced vegetable oil and biodiesel fuel, had been affected by competition from cheaper imported biofuel and declining demand for diesel cars in Europe, the Economic Times reported on 9 November.
Saipol incurred losses of €133M (US$147M) over 2015 to 2018 and expected another loss this year.
After launching a 100% biodiesel fuel for trucks and buses made from French rapeseed crops last year, Saipol wanted to focus on exclusively on French-sourced biodiesel and vegetable oil products, it said.
The company would maintain production at four French factories and look to sell or find partners for two others at Sète and Montoir.
The processor would phase out the use of imported palm oil and soyabeans as feedstocks for making biodiesel, managing director Christophe Beaunoir said.
“With this plan, we are tackling the problem of imported commodities and the logic of low prices,” he added.
“We are going to progressively reduce our sourcing via imports to concentrate on our strengths of rapeseed and sunflower.”
The changes were expected to reduce Saipol’s biodiesel production to around 1M tonnes next year from around 1.5M in 2019.
The move to phase out palm oil as a raw material comes after French lawmakers decided earlier in the year to remove it from the list of biofuel crops eligible for public funding, effective 1 January. In addition, operators would no longer be allowed to include palm oil-based biofuels in their mass balances.
Palm oil imports had also angered French farmers, who controlled the Avril group and for whom rapeseed and sunflower were the main oilseed crops, Economic Times wrote.
The legislative change was being opposed by French oil major Total, which had previously secured approval to use palm oil at its La Mède biofuel facility.