Thai Agro Energy Plc (TAE), a SET-listed ethanol maker, has signed a memorandum of understanding with Kamphaengphet Bio Power Co to work together on a new ethanol plant with daily capacity of 200,000 litres.
TAE chief executive Somchai Lovisuth said a feasibility study would take three months.
Following the study, the two companies will discuss the proportion of investment stakes and capital sources.
The project will be a joint venture costing 1.5 billion baht, partly from bank loans.
Mr Somchai said TAE came up with the project to increase its production capacity in 2013 and spoke with two other companies about working together.
"We're confident this deal will work out, as our partner has the proper technology and is very determined to invest in this project with us," he said.
Kamphaengphet is a subsidiary of Sangfah Group, an agricultural industrial company with paid-up capital of 1.2 billion baht. The group is a major producer and exporter of cassava, a raw material in ethanol.
Mr Somchai said TAE had an ethanol production capacity of 365,000 litres a day from its two plants or 125 million litres a year. He expects the sales volume this year will be 103 million litres, rising to 114 million in 2016, which is 90% of capacity this year and 95% next year.
"We expect to run at full capacity in 2017," he said.
Mr Somchai said TAE would also spend 90 million baht next year to improve and maintain its first plant in Suphan Buri province.
TAE posted net profits of 39.3 million baht for the third quarter and 215 million for the first nine months, up by 4.97% and 10.04% year-on-year, respectively, due to government promotion of E20- and E85-fuelled cars.
Third-quarter revenue totalled 639 million baht, down by 7.29% year-on-year, while the nine-month figure was 2 billion, up by 4.12%. Mr Somchai expects full-year revenue of 2.6 billion baht, rising to 2.7 to 2.8 billion next year.
TAE shares closed yesterday on the SET at 3.02 baht, unchanged, in trade worth 2.17 million baht.