Auscol strikes oil with biofuel market for waste cooking fats

Aside from, perhaps, a big takeaway order of finger lickin' fried chicken and chips for hungry truckies and silo workers during harvest, the two appear to have little in common.

Nor does there seem to be any relationship link extending to the airline industry.

In reality, however, GrainCorp has fortuitously found itself at the forefront of one of Australia's more virtuous and increasingly valuable export growth industries - used cooking oil from fast food outlets, cafes, pubs, clubs and food processing plants.

For almost 60 years the grain handling and processing company's waste food oil business, Auscol, has been collecting and recycling cooking fats and oils for use by manufacturers of stockfeed, soap and cosmetics.

More recently the market has swung to the burgeoning low emissions biofuel industry in Europe, Asia and the US.

Global demand for used cooking oil is estimated to be growing about 6.5 per cent annually and likely to be worth close to $18 billion by 2032.

Alongside the hungry market for about two thirds of Australia's canola crop, plus tallow from abattoirs and meat rendering plants, much of the nation's old cooking oil is now shipped overseas to be converted into new-age fuels for trucks, cars and aircraft.

Biodiesel produces less than a quarter of the carbon dioxide emissions of fossil fueled vehicles.

The global airline industry now consumes about 2b litres of sustainable aviation fuel and is expecting compound annual demand to grow more than 40pc in the next eight years.

Local biofuel processing and usage prospects are also being keenly explored for the road freight industry and other heavy equipment operators, alongside options for biogas and green hydrogen.

Auscol, one of Australia's earliest used cooking oil collection businesses, operates pickup, refining and bulk storage services in all states, and last year began operations in Darwin and bought a second Tasmanian facility.

It collects more than 21,000 tonnes a year - enough to fill about 11 Olympic-sized swimming pools.

"If you'd told me five years ago that I'd be working in the energy industry, I doubt I'd have believed you," said business manager, Michael McGuire.

"The renewable fuel industry is evolving so quickly - it's become a key growth area in the agribusiness space.

"We're confident we have great opportunities to grow with it, and that there'll always be a place to move more product to."

Auscol began life in the 1960s as a genuinely grassroots recycling initiative run by Bernard and Hazel Bluhdorn who collected household kitchen fat, or dripping, from their base north west of Sydney in the abattoir township of Riverstone.

Tins of fat and lard were retrieved from suburban housewives and the contents pooled and sold on to be made into soap and lipstick products.

The business became Auscol in 1971 when bought by tallow and oilseed storage and supply business, Gardner Smith, just as Australia was embracing the arrival and rapid growth of quick service "fast food" restaurant chains such as Kentucky Fried Chicken and McDonald's.

GrainCorp took over in 2012 after a $300 million acquisition of Gardner Smith's Australian and New Zealand oils and fats import-export business and oilseed crushing assets.

The deal coincided with GrainCorp's grain storage and handling business expanding into oilseed processing when it brought Goodman Fielder's spreads and oils plants in Brisbane and Melbourne.

Mr McGuire said Auscol was subsequently fortunate to have access to multiple resources in oilseed processing and export market connections, plus engineering and food science skills within GrainCorp's workforce.

In fact, GrainCorp, which also buys and sells tallow and has a trans- Tasman stockfeed division, was the only Australian and NZ company with dedicated fats and oils chemists and feedstock advisors to ensure its used oil met stringent specifications for renewable fuels.

Part of Auscol's collection commitment to customers includes supplying and helping design equipment to easily drain and store used oil from frying vats and meat rotisserie ovens in commercial kitchens and supermarkets across metropolitan and regional Australia.

"We have so many different customers with different kitchen arrangements, from fast food outlets running 24 hours a day to country RSL clubs and fish and chip shops," he said.

"We've become quite innovative in aligning the right equipment and collection arrangements with their housekeeping needs.

"In many cases they just push a button and don't touch the oil or equipment at all."

Regular collections can involve volumes ranging from 500 litres to just 50.

Auscol's primary market for used cooking oil has long been the animal nutrition sector, which appreciated the energy and protein value in what was once considered a nuisance by-product in the food industry.

However, in 2010 the company began supplying overseas renewable fuel processors with drums of oil, then in 2016 switched to shipping bulk exports of refined product to Europe and Asia.

In 2022 the US became a bulk export market, too.

As part of its increasing involvement in the global renewable fuel sector, parent company, GrainCorp, last year began exploring how it could do more to process canola locally and develop an onshore sustainable aviation fuel market.

It plans to build a second West Australian oilseed crushing plant with up to 1 million tonnes of annual capacity, and has initiated a feasibility study with IFM Investors.

WA's own grain giant, CBH, is also looking at similar oilseed processing prospects, potentially with downstream biofuel producers.

Mr Maguire said there was clearly a lot of scope for growth in the agri-energy sector, including more untapped sources of fuel in the used food oil segment.

"We've created a much better, more efficient way of handling a product which was a bit of a problem for food businesses in the past," he said.

"Most people want to do the right thing when dealing with waste, and it's been part of our Auscol DNA to find a better way to help them."