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France's Avril to drop palm oil, may sell sites in biodiesel revamp

PARIS, Nov 8 (Reuters) - French oilseed group Avril may sell two processing factories and plans to stop using imported palm oil as it attempts to turn around its loss-making biodiesel division.

The group's Saipol unit, which produces vegetable oil and biodiesel fuel, has been hurt by competition from cheaper imported biofuel as well as a decline in demand for diesel cars in Europe.

Saipol incurred losses of 133 million euros ($147 million) over 2015-2018 and expects another loss this year.

After launching last year a 100% biodiesel fuel for trucks and buses made from French rapeseed crops, Saipol wants to focus exclusively on French-sourced biodiesel and vegetable oil products, it said in a statement.

Saipol will maintain production at four French factories and look to sell or find partners for two others, at Sete on the Mediterranean coast and at Montoir on the Atlantic coast, it said.

The processor will phase out the use of imported palm oil and soybeans as feedstocks for making biodiesel, Managing Director Christophe Beaunoir said.

"With this plan, we are tackling the problem of imported commodities and the logic of low prices," he said in emailed comments.

"We are going to progressively reduce our sourcing via imports to concentrate on our strengths of rapeseed and sunflower."

The changes are expected to reduce Saipol's biodiesel production to around 1 million tonnes next year from 1.5 million in 2019, he said.

The move to phase out palm oil as a raw material comes as France is set to remove the tropical oil from the list of crops permitted for making biofuels, which benefit from fuel tax reductions.

Lawmakers decided to remove palm oil from France's biofuel scheme as of 2020 in response to controversy over the environmental impact of palm cultivation in southeast Asia.

Palm oil imports have also angered French farmers, who control the Avril group and for whom rapeseed and sunflower are the main oilseed crops.

The legislative change is being opposed by oil major Total , which had previously secured approval to use palm oil at a new biofuel facility in southern France. ($1 = 0.9069 euros) (Reporting by Gus Trompiz; Editing by Elaine Hardcastle)

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