Competition for sorghum is set to increase on Queensland's Darling Downs this year following confirmation that the Dalby Bio-Refinery has been sold to United Petroleum.

The Dalby Bio-Refinery uses sorghum as a feedstock to produce ethanol, and is the only plant of its kind in the country.

It has the potential to use up to 210,000t of sorghum every year but has been operating at reduced capacity for almost 12 months after its previous owner went into receivership in June last year.

The plant has been managed in the interim by receivers Ernst and Young, but is expected to return to full production when its new owners United Petroleum take over in mid-August.

United Petroleum is an Australian owned independent fuel retailer and wholesaler with a strong history in ethanol blended fuels. The company’s website says its PLUS ULP brand of e10 fuel is the most widely known and accepted brand of e10 in Australia.

With a fuel distribution network that spans all Australian states except Western Australia, United Petroleum has ready-made outlets for a large percentage of the ethanol it will produce through the Dalby Bio-Refinery.

United Petroleum general manager of Wholesale and Logistics, David Szymczak, said the company planned to operate the plant at full capacity and had plans to inject further capital into the plant as part of its long term vision for the asset.

A sale price was not disclosed.

The plant was built at a cost of $85 million and commissioned in December 2008. It has the capacity to produce 80 million litres of ethanol a year.

With the capacity to process up to 210,000t of sorghum annually, the Dalby Bio-Refinery is a major potential user of sorghum in a region that typically produces anywhere from 400,000t and 800,000t per year, depending on seasons.

For sorghum growers and the grain trading industry on the Darling Downs, confirmation that a large buyer is likely to return to full operating capacity will provide a welcome level of certainty.

For the major users of sorghum on the Darling Downs – cattle lot feeders – the news is likely to be greeted with mixed feelings. A number of large feedlots use the by-product distillers grain produced by the Bio-Refinery as a cost-effective feed source.

However the return of the ethanol plant to full production will also provide an additional level of competition for all feedlots in the sorghum market.

The Dalby Bio-Refinery is one of three ethanol plants in Australia.