Business Overview

IBE was established to develop a vertically integrated oilseed processing and animal feed manufacturing facility. The Company owns an oilseed processing facility located at Moree in northern NSW (the Moree Site) and intends to develop this site by upgrading the existing oilseed processing plant (Plant) and establishing animal feed production facilities (the Project).

IBE’s principal activity will be the processing of whole cottonseed (WCS). WCS is an oilseed that is produced as a by-product of the cotton ginning operation. WCS is comprised of lint (the remnants of the fibres), hulls (the seed coating) and the seed kernel. The kernel contains a significant amount of cottonseed oil (CSO), and is also high in protein.

The opportunity to develop this business exists because historically only approximately one half of Australian grown cottonseed is processed in Australia. The balance of Australia’s WCS is either exported or fed to livestock domestically in its unprocessed form. In addition, the vast majority of the processing currently carried out in Australia is done by petroleum solvent oil extraction methods, which result in a lower quality meal because of the lower oil (energy) content and higher gossypol concentrations of the meal. In contrast, the IBE process involves chemical free machine pressing of cottonseed kernels.

Production Process

There are three key areas of the production process which are:

• oilseed crushing;
• vegetable oil refining;
• feed meal production, blending and pelleting.

The IBE cottonseed milling project aims to value add to WCS by separating it into its component parts, blending and modifying these, and then selling these products into their respective higher value markets.

Cottonseed milling products have unique qualities as animal feed. This is because the hulls are high in effective fibre and are very palatable , and also because a significant proportion of the proteins in the meal are protected from premature degradation in the rumen of grazing animals . IBE's mechanical extraction process further enhances this production. IBE enjoys significant linkages with the Northern Australian beef industry where demand for protein supplements such as that derived from cottonseed meal is expanding, and the provision of meal based supplementation products into these markets provides the Company with a significant value adding opportunity. This means the company is not solely reliant on achieving an acceptable processing margin, but can also pursue downstream opportunities.

Cottonseed oil, if suitably refined has unique qualities as a human consumption vegetable oil as it is highly stable and resistant to the formation of trans fats . Cottonseed oil is also a suitable substrate for biodiesel production and a valuable stockfeed additive.

Technology

There are three key areas of the proposed production process that require the sourcing of equipment in addition to that present in the existing Plant. These are:

• oilseed crushing;
• feed meal production and pelleting; and
• vegetable oil refining.
• recreational and thoroughbred horse industries.

IBE has undertaken extensive industry research in Australia and the United States regarding available technology solutions in each of these key areas. The Moree Site’s existing facilities have been evaluated against this research in order to determine the optimum combination of technology for IBE’s proposed production process.

Oilseed crushing

IBE will employ mechanical oil extraction technology rather than the widely used solvent extraction process. The Directors believe that the benefits in quality and nutritional value of the feed meal produced by mechanical methods outweigh the slightly lower oil yield. Feed meal produced mechanically has higher oil content and higher levels of protected protein, as well as having no exposure to processing chemicals.

The Moree Site has substantial existing oilseed crushing facilities, however IBE has established that it requires expansion, upgrade and reconditioning in order to efficiently process IBE’s forecast tonnages.

Mixing and pelleting of feed meal will deliver the flexibility needed to meet the varied requirements of feed products for cattle, pigs and chickens along with specialist areas such as the equine industry and aquaculture. The Moree Site has, in the past, included a feed production facility which has been removed, however some of the required infrastructure remains. It is planned to re-install a new feedmill and pelleting facility as part of the upgrades to the Plant.

Vegetable oil refining

Once extracted, vegetable oil requires some simple refinement in order to stabilise it for storage and sale. This involves the removal of the phosphatides (degumming) and any free fatty acids. Basic refining infrastructure is located on the Moree Site, however this is considered inadequate to provide an acceptable throughput and suitable oil quality. It is proposed the existing refinery will be upgraded and expanded with new equipment.

Biodiesel production

IBE’s research indicates that there is currently no margin in producing biodiesel from good quality vegetable oils; however technology in biodiesel production continues to evolve quickly with substantial gains being made in quality management, flexibility in feed stocks and reductions in running costs.

Should the production of biodiesel become an economically attractive option, then biodiesel production may be considered as an alternative use for IBE’s vegetable oil production.


Oilseed Accumulation Strategy

Australian oilseeds production typically ranges between 2 and 3 million tonnes annually. Canola (57%) and cottonseed (36%) are the major oilseed crops accounting for 93% of total production. (AOF).

Australia is under equipped with oil seed processing capacity with on average up to 1,846,000 tonnes of unprocessed oilseeds exported annually despite Australia's position as a significant net importer of vegetable oil.

Other oilseeds that are grown include: Soybeans (3%), Sunflower (4%), Safflower and Linseed/Linola. (Data from AOF Website)

The IBE Management team has developed a diversified oilseed purchase and accumulation plan.