MORE than 30 employees at Barnawartha's biodiesel plant will be made redundant in coming weeks after its parent company entered voluntary administration on Thursday.
The jobs blow was confirmed by the plant's owners, Australian Renewable Fuels Limited, which has been hit by the slump in oil prices which has driven down margins of the alternative fuel producer.
It has been in a trading halt this week as the oil price crash was fully assessed and discussions with banks to keep operating took place.
The biodiesel plant in Plemings Road is one of the largest private companies in the Indigo Shire, producing 60 million litres of fuel annually, after starting up a decade ago.
The price of crude oil has tumbled by more than 70 per cent over the past 18 months.
ARF managing director Andrew White said employees would be made redundant over the next six weeks and paid full entitlements.
The company issued a statement outlining the reasons for the move which will result in the plant sitting idle.
"It is with deep regret and much disappointment that factors outside the control of the directors have led to this disappointing outcome," the company said.
"The board has been conscious of the rapidly declining oil price and been monitoring closely the company’s feedstock pricing so as to ensure that appropriate trading margins were maintained.
"Historically there has been a relatively short time lag between a reduction in the oil price and a reduction in feedstock pricing."
Biodiesel plant jobs were under threat last year until excise rules were changed by the federal government.
Legislation introduced in 2011 to keep biodiesel free of excise until 2021 led to a $45 million expansion of the Barnawartha plant.
But the situation changed dramatically when former Treasurer Joe Hockey announced in the 2014 budget that excise had to be paid from 2016.
Indi MP Cathy McGowan said ARF entering voluntary administration was a "devastating" move.
"I really feel for the people who work there and just hope they come through this crisis period," she said.
"It's another blow for the Indigo Valley so soon after the fires in that area."
ARF plants including Barnawartha use tallow, vegetable oil and used cooking oils to produce clean-burning diesel that contains 100 per cent renewable resources.