Evogene Ltd. (TASE:EVGN) today notified the Tel Aviv Stock Exchange (TASE) that it and Ormat Industries Ltd. (TASE: ORMT) subsidiary Orfuel Inc. were discontinuing their castor oil plant biofuel joint venture with Lev Leviev Biofuel Namibia (Pty) Ltd. The official reason for the break-up is the failure to obtain licenses to import castor oil plant seeds to Namibia.
Evogene added that it will not suspend its efforts in this area, and that it will seek to grow castor oil plants in North and South America. Ormat has not disclosed its intentions on this matter.
Evogene, Ormat, and Leviev set up the joint venture in Namibia in September 2008.
Sources inform ''Globes'' that Ormat is abandoning its biodiesel activity, because, despite the potential, which could be much larger than the company's geothermal activity, success in biodiesel depends on highly problematic R&D. Agricultural R&D is dependent on the weather, which is becoming increasing unpredictable. Biodiesel R&D is prolonged and complex, both in terms of investment in research and the financial investment.
When the power struggle at Ormat between its controlling shareholders (the Bronicki family) and Chaim Katzman escalated, Ormat chairman and CTO Yehuda Bronicki was heard telling people in the renewable energy industry that he had neither the wish nor the wherewithal to make the necessary investment in biodiesel, and that Ormat would focus on its core business of geothermal energy. It appears that the power struggle between the Bronickis and Katzman involved heavy costs, and left Ormat without the means to conduct a research adventure in biodiesel.
In response to a question by "Globes" on this point, Ormat said that there had been no change in its plans for biodiesel, and that the company was pursuing R&D as usual. Ormat, however, has released no announcement to this effect.
Ormat's share rose 3.1% by mid-afternoon on the TASE to NIS 34.02, but Evogene's share fell 1.5% to NIS 10.90.
Published by Globes [online], Israel business news - www.globes-online.com - on May 25, 2009
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