September 19, 2007

China Agri to divert ethanol funds to oilseed, biochem projects
 

China Agri-Industries Holdings Ltd., a unit of China's biggest grain trader, will invest in oilseed and biochemical plants instead of ethanol production after the government banned new projects that turn grain to biofuel, reports Bloomberg News.

The Hong Kong-based company, which said in a March share offering it would spend HK$2.8 billion ($360 million) to expand fuel-ethanol output, will now invest in projects with less "regulatory uncertainty,'' according to a filing last night.

The National Development and Reform Commission, China's top economic planning agency, said last month the government will not allow an increase in the production capacity of plants that make fuel ethanol from grain crops, the statement said.

China Agri is owned by COFCO Ltd., the state-owned grain trader and processor, which is also the parent of China Foods Ltd.

China Agri gained as much as 2.4 percent today to HK$5.05, and traded at HK$5 at 10:03 a.m. in Hong Kong. The stock was sold in the initial public offering in March at HK$3.72.