Associated British Foods, which owns British Sugar, has unveiled a fledgling joint venture with petrochemical giant BP and biotechnology firm DuPont to build a £200m biofuels facility at BP’s site at Hull.

The deal is subject to regulatory approval, but if successful will produce 470m litres of bioethanol a year and consume about £1m tonnes of wheat, much from the domestic market. The plant is planned to come on stream in late 2009 and ABF says it expects a return on investment in the first year.

In addition to the bioethanol factory, BP and DuPont have revealed plans to construct a demonstration biobutanol plant nearby, to explore the processes of producing 20,000t of biobutanol on a big commercial scale.

Phil New, head of BP Biofuels, said: “Laboratory research work on the production of biobutanol, which will be the first advanced biofuel the BP and DuPont partnership brings to market, is progressing well. However, in order to have a petrol biocomponent available to meet the 2010 Renewable Fuel Obligation we will, subject to the necessary approvals, commence construction of a bioethanol plant in Hull.”

Mark Aitchison, managing director of Frontier Grain, which is part-owned by ABF and likely to supply the 1m tonnes of wheat needed by the plant, said that unlike some other biofuels projects, this one was more likely to get built.

“Public companies like Associated British Foods and BP don’t brief the stockmarket and media if they’re not really serious about doing something.”

Mr Aitchison said Frontier would be looking to issue contracts to farmers next year, but would start talking to them immediately. “We want to engage with them to find out what they would be looking for in a contract.”

He said growing the right varieties was important and farmers providing the right quality would be rewarded. “With soft feed wheats there can be a difference in ethanol production of 40 litres/t. When you are producing 420m litres that’s a lot.”

Securing all the wheat needed to meet the UK’s requirement for bioethanol should be possible, reckoned Mr Aitchison. “We’ll produce about 15m tonnes of wheat this year and that can probably be increased to 17m tonnes,” he said.

It was expected that the joint venture would establish another partnership with AB Agri, ABF’s animal feeds business, which would treat and sell spent grains from the bioethanol plant as livestock feed.

ABF and BP would be equal partners holding 45% each, with Dupont holding the remaining 10% of the joint venture company. The European Investment Bank is expected to approve £120m of project help for ABF’s biofuels investments. The investment follows British Sugar’s earlier announcement of its first bioethanol plant at Wissington, Norfolk. This plant will produce fuel from sugar beet and is set to begin production next month.

Associated British Foods, BP and Dupont have announced plans for a new bioethanol plant at BP’s Saltend facility at Hull.

ian.ashbridge@rbi.co.uk