UK biodiesel producer D1 Oils plans to invest up to 700 million yuan to construct a biodiesel refinery in South China's Guangxi Zhuang Autonomous Region with jatropha oil as its feedstock, said D1 chief executive of China operations Khoo Hock Aun.

The project is part of an effort by energy firms, both domestic and foreign, to use the inedible jatropha plant as a fuel source after Beijing banned new biofuel projects using grain as feedstock. The use of grain has led to surging food prices.

The plant will be set up in a new petrochemical industry park in Baise city in northwestern Guangxi, Khoo said.

Scheduled to be completed by the end of next year or early 2009, it will have an initial processing capacity of 10,000 tons, rising to 100,000 over five years.

(US$1 = 7.65 yuan)