Web exclusive posted Jan. 17, 2008, at 4:38 p.m. CST

Tiger Ethanol International announced today its plan to build a sugar refinery and begin cultivating sugar beets for ethanol production in the District of Hami in the Xinjiang Province of China. The company holds 90 percent ownership in Xinjiang Yajia Distillate Co. Ltd., which is currently building an ethanol facility for the company in the District of Hami. President and CEO James Leung said his company's new plan would result in increased ethanol production, as well as an additional source of income, but will depend on supply and prices.

Leung said the ethanol plant is 85 percent complete and should be operational by the end of March. The facility will employ approximately 100 people and will have a start-up capacity of 10,000 tons per year. However, Leung said capacity is scheduled to increase to 20,000 tons per year within the first year of operation. Corn will be the initial feedstock, but according to Tiger's new plan, the company would use sugar beets by 2009.

Tiger Ethanol conducted experiments over several months to determine if sugar beets would be a viable crop in Hami. The company concluded that the production of sugar beets in that area would not only be a feasible solution for ethanol production, but it would also bring in additional income through the production of refined sugar.

Tiger determined that the District of Hami has 500,000 acres of farmland suitable for growing sugar beets. According to the company, farmers will be able to switch from single-crop to double-crop fields by growing barley from March to June and sugar beets from July to October. Tiger said income for local farmers will almost double as a result. Leung said there was a state-owned sugar plant in Hami until eight years ago, so farmers in the area are already familiar with growing sugar beets.

Tiger said it will implement its plan in three phases. Phase one will involve collaborating with the local government to utilize 100,000 acres of farmland and produce 500,000 tons of sugar beets by 2009. The company will expand the ethanol plant to produce 50,000 tons per year and will also build a $15 million sugar refinery next to the existing ethanol facility.

During phase two between 2010 and 2012, Tiger hopes to expand its ethanol plant to 75,000 tons per year and will add 100,000 acres of farmland. By 2012, production of sugar beets is expected to reach 1 million tons per year.

The final phase of the plan is set to be completed in 2014. By then, the company wants to have a total of 300,000 acres of farmland producing 1.5 million tons of sugar beets each year. If that happens, the company's ethanol plant will be expanded to produce 100,000 tons per year.

"Our goal has been to accelerate growth while respecting the local economy and the impact on the food chain," Leung said. "We are benefiting from a healthy increase in the price of ethanol in China, and our securing an ongoing supply of biomass at a reasonable price places us in a favorable situation."

Xinjiang, a large province in the western corner of China, shares borders with Mongolia, Pakistan, India and Khazakstan.