The AAE Team
From left to right:
Thomas Munn (CEO); Neo Moloi (Bio-chemist/Technology advancement); Svend Jensen (Production Manager); Lorenz Rugheimer (Bio-diesel Production); Marcel Steinberg (Sales and Marketing Director); john ngcobo (Dispatch & Collections); smit mnomiya (Assembly & biodiesel production)
AAE was formed by a few private individuals to commercialize a de-centralized sustainable model of Biofuel production, out of a real desire to assist with the developmental needs of South Africa and its people.
Having had experience with and been exposed to the Africanisation of products and technologies with previous business ventures, we directed this insight towards the task at hand. We researched the small-scale agricultural mechanization industry, finding the Chinese equipment the most advanced, reliable and comprehensive, while at the same time being relatively uncomplicated. This was the first step, as Biofuel production is for the most part and predominantly an agricultural endeavour.
This equipment needed to be adapted to local conditions. A full set of implements were added to the basic equipment and a full set of English workshop manuals produced, as well as a full range of stationary applications.
Next we researched matching small to medium scale Biofuel production equipment, and found, the sector not well developed, with no really suitable equipment and technology. What was available for one reason or another did not suit our model.
We have developed our own small scale Biodiesel equipment and technology and have combined a number of components available from different manufacturers around the world to be able to supply, in the most efficient way, medium-scale Biodiesel production facilities.
As a result of the convergence of a number of international and local factors, we are in the perfect position, with the combination of our technologies and business model, to offer a solution to rural empowerment and employment requirements - and environmentally friendly, sustainable, energy needs.
The endeavour originated with a strong bias towards organic agricultural methods, as it is the only long-term sustainable model in our opinion, and adds tremendous value to the process, while reducing the costs.
The value of the bi products is a key factor in the viability of biofuel production, as market prices for the feed stock can seriously affect the profitability of the project. As a result we have chosen the soya model for a start, as the bi-product of soya meal is of high nutritional value. By hedging the price fluctuations of the bean against the meal price, which will within a few months follow the bean price, we reduce the effect of market price fluctuations on the viability of the Biodiesel production.
Secondly, by value-adding through selling of the by-products, you dramatically increase the profitability of the venture and will be able to sustain the pricing of the Biodiesel at levels just below the mineral diesel price.
All of the processes and equipment have been proven and tested, and the technology is relatively simple and cost effective. The production process and equipment is capable of handling a wide range of raw materials with little or no adjustment.
The risks are further mitigated by the decentralized model for the following reasons:
- By spreading the production of both the feed stock and the finished products over a number of producers and regions, you spread the risk as well. For example, erratic rain patterns or civil unrest in one region will not necessarily affect the next region or seriously affect the overall production of the company.
- By having 10 small tractors working 10 small farms instead of one, you limit the risk of down-time due to mechanical failure or the human factors, as the rest will continue to operate.
- The wide range of high-value products that can be produced from the by-products further mitigates the risk of markets being oversupplied.
The de-centralized model for Biofuels is the most cost-effective and competitive model, because you produce the fuel and use the fuel in the same place and do not need to transport the raw material or finished product anywhere. It is in the nature of Biofuels to be produced on a de-centralized model, while empowering the local communities.
We have focused on Biodiesel first, because with current technology it is already energy-positive to the factor of 1 to 3. With further technological advances it will be come even more so. The legislative environment is now conducive to the model we propose, and our technology is ready for commercialization.
We are developing a Bio-ethanol model for a second phase rollout, also de-centralized and based on cutting edge technology which will make bio-ethanol commercially viable, as a result of high-yielding crops and cellulose conversion technology.
We have decided to offer our solutions on a joint venture or franchise model, so as to ensure ongoing support and access to evolving technological advancements by the small scale producer. We are also providing national branding and business training and support, which will contribute further towards the success of the venture.
Lastly, we are looking at tying up distribution deals on mineral diesel to blend with the Biodiesel and further enhance the profitability of the plant.
This model can address all the aspirations of ASGISA and assist with cleaning up the environment. Each medium-scale plant will create around 50 direct jobs in rural areas, as well as creating the mechanism for a further 5 000 indirect jobs through SMME’s and emerging farmers in the agricultural sector. The project will also go a long way to ensuring energy security, through this sustainable de-centralized Biofuels business model.