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The Jatropha Project in Zambia

|Apr 9|magazine11 min read
Jatropha Curcas is regarded as an excellent bio-fuel crop with many advantages over existing crops. Corn and rice are common bio-fuel crops, but they are also essential worldwide food crops, producing relatively low yield and requiring the use of good quality arable farmland.

Jatropha, by comparison, provides excellent yield (twice that of rice, as measured in barrels of oil per square mile per year, and ten times that of corn), is a crop which can grow in arid conditions, on any kind of ground, does not require irrigation or suffer in droughts, and increases the fertility of the land in which it is grown. It is fast growing, begins yielding oil in the second year with optimum yields being obtained from year six, and continuing for forty or fifty years.
 
Not surprisingly, Jatropha is now regarded as one solution to the world's search for new sources of energy, with Goldman Sachs having cited Jatropha as one of the best candidates for biodiesel production. Whilst India currently leads the way in the cultivation of Jatropha in industrial terms, it is cultivated in almost all tropical and sub-tropical countries.
 
From a commercial perspective, the approach of governments to biodiesel production is of huge importance. The EU has a target of 20 percent of all diesel fuel to be sold at the pumps to be biodiesel by 2020 and the target for 2010 is 5.75 percent. Sadly, the achievement at the beginning of the year was close to zero. The Copenhagen Accord, agreed by most major economies including the US and China, made a commitment to limit the rise in global temperature to 2 degrees and raise $100 billion annually by 2020 to help developing countries to curb climate change, and although environmentalists are dismayed with the impact of the Accord so far, further meetings are scheduled to bolster the delivery of the Accord. Meetings are due to take place this month on further commitments for parties under the Kyoto Protocol and long-term cooperative action. These sessions will also be preceded by preparatory meetings of the group of 77, China, the African Group, and small island developing states. Although the general goal is for countries throughout the world to reach energy independence, it is crucial for countries such as Zambia to invest in bio-fuel in order to meet their Kyoto Protocol commitments and to establish competitiveness of the Common Market for Eastern and Southern Africa (COMESA) member countries. Perhaps now therefore, when climate change goals are gathering momentum, is the time to enter the bio-fuels market.
 
In Zambia, large quantities of Jatropha hedges exist, which the population has neglected over the years. Planting Jatropha for biodiesel production has become a viable business in Zimbabwe, with government and industry studies suggesting that biodiesel can potentially contribute 30 percent of Zimbabwe's fuel needs and create thousands of new jobs. It is no wonder that a similar initiative has been launched in Zambia. The Zambian Development Agency and MAN Ferrostaal AG of Germany signed an integrated biodiesel industry Memorandum (MoU) of Understanding in 2009. The MoU will facilitate the securing of finance and acquiring of 150,000 hectares of land for the project.
 
D1 Oils Africa, the regional subsidiary of D1 Oils Plc, was appointed as a member of the Zambian Government's Task Force Committee on Renewable Energy to develop a policy on biodiesel for the country in 2005 and by March 2006 D1 Africa had planted over 4,900 hectares of Jatropha in Zambia. D1 Oils faced criticism over the so called 'miracle' Jatropha in 2008, with critics saying D1 Oils had been too optimistic over yields which could not be realized. However, D1 Oils released a trading update in February of this year, claiming that it was continuing to deliver value from existing Jatropha plantations. The directors further announced that contracts for $0.8 million have been secured for government funded Jatropha planting in North East India, signifying only success from the Zambian model.
 
Decreasing oil production from almost all the oil reserves and ever-growing demand for oil means that the search for renewable energy sources is becoming critical, and the rising environmental concern has focused the world’s gaze on biodiesel use. Institutional investors, industrial giants, nations themselves and the smaller investor through Jatropha Green Oil Investment Programmes are investing capital in the Jatropha green oil industry because not only is it an ethical investment, but plantations are also proving to provide a high return on investment (ROI). The high ROI from Jatropha has the potential to continue increasing as stocks of indigenous crude oil dwindle and prices soar. For the shrewd investor looking to enter the bio-fuels market, the Jatropha green oil industry in Zambia may well be the way to facilitate this.
 
www.howardkennedy.com