SEVEN months after it was launched, eucalyptus oil producing company Euco Ltd is on track for its first distillation at Wundowie.
Company executive director Ric Collins said the recently built distillation unit had a 50-tonne, single-shift, daily biomass capacity with provision to treble daily throughput without further modifications.
The company was also planning to develop and use a new distillation process that could extract oil quicker and was more mobile, allowing the unit to be transported to strategic regional locations.
Ric was in Gnowangerup recently to promote the company and encourage farmers in southern regions to plant oil mallees.
He said more than 1000 farmers had planted 8000 hectares of oil mallees. The oil mallee trial phase was over and the focus was now on an oil producing industry, particularly as a commercial harvester was now available.
With a global demand for more than 4500t of oil annually, WA had to now prove it had the scale, ability to harvest and produce good quality oil at a reasonable price before "anyone will look at us".
China had been a major producer in the past, pot-stilling oil from blue gums, but it was low paid and many of the producers had left the industry to seek other work in regional centres.
Prices had been volatile but were currently at a relatively high level and these fluctuations had been an impediment to the development of more uses for the oil.
Ric said the company had negotiated a sales outlet with Sydney-based oil producer and marketer Felton, Grimwade and Bickford for an initial supply of 1000t of oil a year.
Euco was hoping farmers will dedicate 10,000ha to oil mallees to meet this current demand. So far there had a good response, with seedlings going in from Three Springs to Jerramungup, and a particularly good uptake from farmers in the Yilgarn region where drought highlighted the enormous hardiness of oil mallee seedlings.
The company's aim was to harvest trees year round and it was prepared to transport biomass "a fair distance".
Mallee farmers along the south coasts were being targeted to provide a buffer against drought in northern areas but they were also advised to grow the trees on country that had the moisture to yield 10-20t of biomass a year from the standard 4000 seedling a hectare planting.
At the recent meeting, farmers showed their enthusiasm, especially after mounting anecdotal evidence that oil mallees have helped reduce frost damage to crops.
Euco is offering farmers a complete package from site evaluation, hi-oil content seedling planting, through to annual harvesting and biomass carting.
It is offering a limited number of farmers an opportunity to engage in 50-100ha plantings over five to seven years with the option of becoming a shareholder in the publicly unlisted company.
Euco projected that oil mallees would return $200-$400 a hectare annually after the fifth year with very few costs, a figure that Ric said rivalled production from conventional farming.
"That means 100ha could return $20,000 to $40,000 a year and that is a figure that can allow a farmer to retire and let his son keep on farming."