The Perth-based company, which listed on the Australian bourse last September, said construction of the 100,000 tonne per annum facility was on time and budget.

Pre-commissioning has now started and the plant is expected to be ready to enter production in July.

However, Sterling says it has decided to delay bringing the plant online until palm oil feedstock becomes cheaper.

“Given the continuing spike in palm feedstock without any corresponding increase in the biodiesel selling price, it is prudent to delay commencement of production,” it said.

“The company believes that with rising feedstock production, feedstock prices will fall towards historical averages in the latter half of the year.”

Sterling is targeting its product at the European market, where recent legislation requires 5.75% of all fuels to contain biofuels by 2010.