China Agro-Technology Ltd. has signed a Memorandum of Understanding with the Beihai city government to set up a biodiesel refinery plant in Beihai, Guangxi Province in the People's Republic of China. According to the company it expects to invest up to $200 million over the next four years to operate a plant which, at full capacity, can produce 2 million metric tons per annum. CAT has a target completion timeline for the factory of six months from the date of commencement.

Using present market prices, the net profit for every metric ton of oil would be US $350. Therefore, beginning in the 1st Quarter of 2009, CAT estimates that it can produce a minimum of 80,000 to 100,000 metric tons, yielding a net profit of US$30-40 million assuming current production capabilities.

CAT Founder & Chairman, Dr. Harry He noted that "Biodiesel has the highest demand of any commodity in China. To meet the 2020 B10 Kyoto Protocol requirement, China needs 12,400,000 tons of biodiesel in 2008. However in 2007, the supply in China was less than 1 million tons. Therefore, the product from this biodiesel plant will be a very important part of China's effort to meet the requirement."

Beihai is located between Guangxi and Guangdong Provinces at the southern part of China, facing Southeast Asia. Beihai Harbor, located at the northeastern bank of Beibu Gulf, is a deep-sea port with the capacity to handle vessels up to 300,000 tons. Beibu Gulf is one of the Central Government recognized Economic Development Zones granted special benefits:

    (a) Allocation of 1000 mu (66.6ha) of industrial land with full infrastructure and facility at a special discount;
(b) Attractive tax incentives including tax free for the first 2 years and 50% tax reduction for the following 3 years;
(c) The right to apply for a subsidy of RMB1,300 (est. USD180) for every ton of biodiesel produced.

Dr. He added, "because of CAT's advanced leaf growing technology, coupled with the good suitable land environment, we believe we will be one of the most essential suppliers of Jatropha crude oil. More importantly, however, by being able to produce our own refined biodiesel at the Beihai facility, CAT also will be in a strategically important position in the supply of biofuel. We are currently forming our team of professionals and consultants to execute the plan."