Region’s farmers to benefit from Teeside bioethanol plant

Confirmation that the world's first large-scale wheat bioethanol plant is to start building on Teeside within weeks has provided a huge market that will underpin the value of feed wheat for farmers in the north of England and southern Scotland.

Yorkshire-based Stephen Large of Glencore Grain - which will be sourcing the entire 1.2 million tonnes of grain for the new Ensus production facility at Wilton - believes lower transport costs and the desire to buy green-fuel stocks locally will mean the region's growers are in prime position to supply the feed wheat for conversion into bioethanol.

The plant is planned to start output in early 2009, with capacity to produce up to 400m litres of fuel a year. The entire bioethanol output has already been contracted to Shell, and it will be mixed with petrol to help fulfill the company's renewable fuels obligations.

"The Ensus plant is the most important development for the region's farmers for over 30 years," according to Mr Large. "Following the devastating closure of the York sugar beet factory, creating this new market for biofuel wheat will have a very positive impact on farm incomes, the whole rural economy and the environment."

Keith Davies, the Managing Director of Glencore Grain UK added that: "feed wheat prices in Yorkshire and the North East have already firmed up in anticipation of the new demand. The positive news that the Ensus build is about to start should help maintain prices going forward, and give growers confidence to plan for the future. For the first time the value of wheat is going to be linked to the value of oil, and long term there is only one way that the price of energy will continue to go."

- 2 -

However, he warns whilst biofuels will serve to underpin the base price of UK wheat, it is not going to be a bonanza for growers. "Competition from foreign imports will put a ceiling on prices, albeit with a useful premium for UK growers."

On Humberside, Glencore Grain trader John Kaye adds that the location of the Teeside factory will facilitate the possibility of grain from south Yorkshire and eastern England being shipped by coastal vessels, to reduce the cost and environmental carbon footprint of road transport.

"We need farmers to commit to the bioethanol cause from this autumn's drilling onwards, to grow the high volume of grain required to meet the Ensus bioethanol demand," according to Mr Kaye. "It also gives the opportunity to develop the agronomic techniques to deliver the best high-starch specification wheat. Growers can now be confident that the biofuels market for which they are growing really exists." Glencore Grain plans to have new contracts available for growers from mid-summer this year, he adds.

All wheat supplied will be by direct contract with Glencore Grain, which gives growers the security of dealing with an experienced and reputable trader, and the financial backing of the Swiss-based global company, Glencore International AG - with an annual turnover in 2006 of $116 billion and assets of over $47 billion.

Growers can deal with their local Glencore contact in the north of England or Scotland, with the national grain-trading team based at Thame in Oxfordshire, or on-line with the UK's only internet-based live grain trading platform - www.grainman.co.uk

The Ensus UK bioethanol factory at Wilton on Teeside is planned to cover a 12 hectare plot, on the site of former chemical industry facilities. The company recently announced it has secured £90m of funding from the Carlyle Group and Riverstone Holdings - two of the world's leading financiers for the energy sector - to complete the £250m project.

Stephen Large added that as an integral part of the bioethanol production process, the Ensus facility will create a significant tonnage of distillers grains for use as a valuable high-protein livestock feed available for farmers. "The distillers grains produced in the bioethanol process are similar in composition and feed value to grains currently produced by the brewing industry, creating a valuable alternative to imported soya and maize protein for the livestock industry."