Oxford Catalysts Group expects US partner Novus Energy to open a pilot plant imminently for converting agricultural waste into fuel.

AIM-quoted Oxford Catalysts, which is building on technology developed by co-founders Oxford Professor Malcolm Green and Dr Tiancun Xiao of Beijing University to develop a range of products in the clean fuel field, expects Novus to have the pilot plant in Wyoming ready in two weeks. With backers including IP Group, Oxford University and Italy’s UniCredit group, the company stands to receive royalties on sales of fuel-grade alcohols from organic agricultural waste at an anticipated rate of £350,000 per plant, when Novus goes into commercial production in two years.

Chief executive officer Roy Lipski argues that, since Novus predicts an eventual 50 plants in Europe and 50 in the US, the revenue potential of this project is formidable. Oxford Catalysts says it is also talking to a leading household products multinational about launching a product in 2010 using catalysis to generate hot steam without heating or boilers, with potential applications in cleaning, electricity generation and aerospace.

According to Lipski, the company hopes by 2012 to be in a position to receive royalties on its catalytic hydro-desulphurisation process to alleviate the worldwide refinery bottleneck as companies strive to achieve mandatory cuts in sulphur levels in fuel from increasingly ‘sour’ and sulphurous crude oil. Later on, he says Oxford Catalysts’ ‘big dream’ is to obtain economically priced diesel, petrol and other fuels from  ‘syngas’ derived from coal, ‘stranded’ and flared-off gas and biomass waste.

Because Professor Green discovered a catalytic process that did not require platinum or some other precious metal, putting Oxford Catalysts’ technology into use will be significantly cheaper than using other systems, contends Lipski. Despite losing £1.8 million last year, the company had £15.6 million cash at the beginning of 2008, swollen by £4 million from UniCredit arm Pioneer Investments, and enough to see the company through to profitability within five years.

Pioneer and IP Group each hold 19 per cent of Oxford Catalysts, whose shares were floated two years ago at 174p. They hit 233.5p before falling to 116.5p last year, and now stand at 168p, valuing the company at £68 million.

They are not without risk, but could well reward a medium- to long-term speculation.

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Oxford Catalysts	AIM	£96.93m	162.50p	0.00p
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