AAK signs deal for largest Nordic rapeseed facility

By Lorraine Heller

- Last updated on GMT

Related tags Biodiesel Aak

Scandinavian groups AarhusKarlshamn (AAK) and Lantmännen Energi
have signed an agreement to invest in a new rapeseed oil crushing
plant, in a move designed to meet the growing demands of the food
and biofuels industries.

According to fat and oil manufacturer AAK, the new facility will be the largest in any of the Nordic countries.

"The new plant will have a capacity sufficient to crush and refine all Swedish rapeseed.

With a joint, large scale plant we will satisfy the increased demand for rapeseed based products for both foodstuffs and biofuels," said Magnus Jörsmo, president business area AAK Technical Products & Feed.

The SEK400m (€44m) investment will significantly increase Aak's current rapeseed capacity.

The new plant will be placed within AAK's plant in Karlsham, where Lantmännen's biodiesel production is also placed.

The jointly owned crushing plant is scheduled to come on line in the second half of 2009 and is expected to generate profits from the end of 2009.

Biofuels have become an increasingly hot topic in the food and drink industry over the past few years.

In 2003 the EU introduced a directive calling on member states to increase the share of biofuels in the energy used for transport to two per cent by 2005 and to 5.75 per cent by 2010.

A new energy strategy, announced on 10 January 2007, establishes that biofuels should make up at least 10 per cent of the energy used for transport in each country.

And as the food and drink industry increasingly competes with the biofuel sector for the same raw materials, food and drink operators are facing increased prices in a number of sectors.

Earlier this year, the EU's food and drink industry called on the bloc's governments to take action on halting price rises for their supplies, as more crops are diverted for biofuel production.

The Confederation of the Food and Drink Industries of the EU (CIAA) said it was concerned about the impact of the EU's 10 per cent legally binding target will have on the supply of agricultural raw materials in terms of both availability and price.

AAK and Lantmännen said the addition of their new facility will go some way to responding to a surge in demand for rapeseed oil resulting from the increased use of vegetable oils in the energy sector.

AAK, which was unavailable for immediate comment, said in a statement issued today that the plant will use the most modern technology available to industry today, making it one of the most efficient plants in the world.

"We are striving for a growing proportion of high value added products, and a jointly-owned company for the crushing of rapeseed oil is an important step in the right direction," said Jerker Hartwall, AAK's President and CEO.

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