YaSheng Group, a Chinese $1.5 billion hi-tech agriculture, salt chemistry and biotech conglomerate, has signed a letter of intent to acquire 80% of Montana-based biofuels firm Sustainable Systems, LLC. Sustainable will become a division of YaSheng and continue its focus on developing biorefineries and continue to research, develop and commercialize bio-based fuels, lubricants, specialty chemicals and other bio-based products. Sustainable Systems currently markets two brand of biodiesel: Montana Biodiesel and PacBio in B2, B5, B20 and B100 blends.

The combined company will seek to expand its manufacturing operations and retail pump presence. It anticipates developing and building a scalable bio-refinery in Washington State with a projected annual output of 253,000 tons. Sustainable had dicussed its plans for a Pacific Northwest biorefinery at the National Ethanol Producers conference in June—the acquisition by YaSheng should provide the resources necessary for such expansion.

“We are very excited to have moved forward with the YaSheng Group. We have a common value system and vision that is focused on maximizing the potential of agricultural and waste raw materials to fill emerging market demands. Our timing is excellent and the combination with YaSheng will enable us to commission the first bio-refinery in the Pacific Northwest, expand our domestic and global development strategy, and continue to move discoveries off the bench-top and into commercial production,” stated Paul T. Miller, Managing Member of Sustainable Systems.

It will be interesting to see how aggressive YaSheng is with biodiesel, especially in China, given the recent spate of bad environmental news coming from there. My guess is: very.