Redhall celebrates £18m deal for fuel site

REDHALL has won a landmark £18m contract to build a new green fuel site near Hull for oil giant BP and its partners.

Wakefield-based Redhall will design, build and install a new bio-ethanol plant at the existing BP Chemicals Saltend site within the next nine months. The site is due to be completed by the end of October.

The project was won by two of Redhall's acquired companies, Chieftain Group and Jex Engineering.

Redhall chairman David Jackson said: "This project underlines the technical skills we inherited with these two acquisitions. We have indicated that the benefits of the Chieftain acquisition would become evident during the course of this year and this award further validates that strategic move."

Redhall chief executive Simon Foster said the project was an exciting development for the group as it establishes its green credentials.

"This is strategically very important," he said. "We are a key player in future energy markets and we see a number of opportunities for growth in the UK."

Bio-ethanol is a green fuel that is added to normal fuels used in cars. Typically normal gasoline can contain five to 10 per cent bio-ethanol.

Mr Foster said the location at Saltend near Hull is strategically important as the plant will have a large feedstock of sugarbeet on its doorstep to produce the bio-ethanol.

Redhall said the contract will strengthen its order book for the current financial year and the first quarter of 2010/11.

"Our strategy of focus on the key energy and defence markets is delivering benefits, although conditions remain challenging in the short term," said Mr Jackson.

"Our order pipeline remains strong and we expect to announce further progress at our interim results on June 3."

At the group's AGM yesterday Mr Jackson said overall trading during the first quarter is in line with management expectations.

"Our energy division has performed well, defence is in line and process continues to face competitive market conditions," he told shareholders.

The group's shares closed the day up 3.6 per cent, a rise of 6p to 172.5p.

During a recent visit to Saltend, business secretary Lord Mandelson said the new site will help to expand the UK's economy and enhance its reputation as a world-class centre for innovation and research.

"This will place the UK at the forefront of next generation biofuel development," he said. "New industries such as low-carbon and renewable technologies have huge potential for driving growth. This is precisely the type of investment project we need attract in order for these industries to thrive in the UK. I'm delighted that Hull and East Riding are at the cutting edge of R&D to realise that greener, brighter future."

The BP site at Hull is home to Vivergo Fuels, a joint venture between BP, British Sugar and DuPont.

Vivergo is the company behind the new world-scale bio-ethanol facility, which will employ approximately seventy people when the site is operational.

BP, one of the world's largest oil and gas companies, is a leading player in the global biofuels market.

Since 2006, it has announced investments of more than $1.5bn in biofuels research, development and operations.

Redhall has expanded through an ambitious acquisition strategy under Mr Jackson.

A year ago it bought Newcastle's Chieftain group for 18.6m, funded by a share placing.

It bought Jex Engineering Company for 12m in 2007 to extend its operations into the food, pharmaceutical and chemical markets, and also snapped up nuclear plant engineer and designer Steels for 2.1m.

The group has said it has plans to make acquisitions in the energy sector, while growing its defence and process divisions organically.

Leading the way in UK's revival

Britain's manufacturers are enjoying a long-awaited revival, with companies like Redhall expected to lead the charge.

New figures out this week showed that growth in the manufacturing sector hit a 15-year high last month.

The sector started 2010 in resurgent fashion, with new orders setting a multi-year high and employment growing for the first time in nearly two years, according to the Chartered Institute of Purchasing & Supply (CIPS).

Its monthly headline activity index, where a score over 50 registers growth, showed a reading of 56.7 in January – the highest level since October 1994.

The result, ahead of an upwardly revised 54.6 seen in December, was far better than expected after many economists pencilled in a small decline.

A rise in employment also came as a welcome development for the sector, albeit following a "slight increase", said CIPS.

UK manufacturers have cut many thousands of jobs after being hammered by the recession.

But the weak pound is providing a much-needed boost, with new export orders at the highest level since CIPS began collecting export data in 1996.