D&L Industries Studying the Feasibility of Building a Second Biodiesel Plant

D&L Industries, through its wholly owned subsidiary Chemrez Technologies, Inc. (CTI), is looking into building a second biodiesel plant in support of the government’s plan to further increase the biodiesel blend from currently 3% (B3) to 4% (B4) by October 1, 2025 and eventually to 5% (B5) by October 1, 2026.

This comes as a continuation of D&L’s pioneering efforts in championing the local biodiesel industry. From 2002-2006, CTI funded the many technical research data on the fuel features of biodiesel from both local and foreign laboratories. In 2006, CTI built Asia’s first continuous coconut biodiesel plant, boosting the feasibility of the Philippines developing its own local biodiesel industry. Today, CTI is the largest biodiesel manufacturer in the country.

Benefits to the economy and environment solidify biodiesel’s long-term viability

D&L maintains a positive long-term outlook on the local biodiesel sector, recognizing the significant benefits that an increased biodiesel blend can offer to the economy, environment, and consumers.

By developing the industry, several facets of the economy are set to benefit. With at least 20% of the Philippine population directly or indirectly benefiting from the coconut industry, the potential for economic value creation in the form of additional investments and jobs in both the agriculture and the manufacturing sectors are significant.

Moreover, the push towards biodiesel translates into greater use of indigenous fuel, which reduces the country’s dependence on imported fossil fuels, supporting energy self-sufficiency. With less reliance on imported fuels, the fluctuations in global oil prices would have a lesser impact on the country's foreign exchange reserves. This stabilization can lead to a more predictable economic environment for currency management.

From a sustainability perspective, coco-biodiesel offers a meaningful avenue to collectively cut carbon emissions. According to the study done by the University of the Philippines Los Baños, coco-biodiesel emits a whopping 78% less emissions versus petroleum diesel. On top of that, an increase in biodiesel blend from B2 to B5 is estimated to yield an estimated 10% mileage increase, which directly translates to consumer savings.

Alignment with D&L’s strategic growth initiatives

The positive regulatory developments coupled with a greater recognition of the economic and environmental benefits of a higher biodiesel blend presents an opportune time to invest and capitalize on the industry’s potential. D&L sees this as a critical juncture in reinforcing and expanding its leadership in the industry.

With the Batangas plant now completed and no other major capital expenditures in the pipeline, D&L has the financial flexibility to potentially undertake the construction of a new biodiesel facility, which would require much smaller capex compared to the amount spent on the Batangas plant.

While the company is cognizant of the risks, D&L believes that the essential nature of biodiesel alongside a favorable regulatory environment ensures consistent and growing demand, mitigating risks associated with economic fluctuations. D&L is currently in the final stages of evaluating the risks and returns of building a new biodiesel plant, with the decision largely contingent on how well it aligns with the company’s strategic growth objectives and the goal of maximizing long-term shareholder value. Any expansion plan requiring substantial capital expenditure will also need to be approved by shareholders.

D&L Industries is a Filipino company engaged in product customization and specialization for the food, chemicals, plastics and consumer products ODM industries. The company’s principal business activities include manufacturing of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use. Established in 1963, D&L has the largest market share in most of the industries it serves, as well as long-standing customer relationships with the Philippines’ leading consumer and manufacturing companies. It was listed on the Philippine Stock Exchange in December 2012.