UPDATE 2-Clean Power, China co. eye Canada canola plant

Fri Jan 28, 2011 4:01pm EST

 * China company would be main owner, buy all oil
 * W. Canada crushing highly competitive
  (Adds analyst comment)
 WINNIPEG, Manitoba, Jan 28 (Reuters) - Clean Power Concepts
Inc (CPOW.PK) said on Friday it has formed a joint venture with
China's Chongqing Grain Group Co. Ltd (CGG) to study the
feasibility of building a 600,000-tonne canola crushing plant
in Western Canada.
 The plant, if built, would add to an intensely competitive
industry that has seen crushers Cargill Inc [CARG.UL],
Richardson International, Louis Dreyfus and Bunge Ltd (BG.N)
expand plants in Western Canada.
 It's unclear how the crush plant would be financed and some
canola industry officials said they had heard little about the
companies or their plans.
 Building another large crushing plant in Western Canada is
questionable, considering crush margins -- a measure of
profitability -- are currently poor, said Don Roberts, analyst
at Canolainsight.com.
 "I think there's overcapacity," he said.
 A Clean Power spokesman could not be reached for comment.
 Farm production of canola, which is crushed for oil for use
in vegetable oil and for its meal for livestock feed, is
expanding with demand and prices rising.
 China is a key export market for canola oil.
 Vancouver, British Columbia-based Clean Power would buy the
meal produced at the plant, while CGG would buy the canola oil,
Clean Power said in a press release.
 CGG would be the majority owner of the plant.
 (Reporting by Rod Nickel; Editing by Lisa Shumaker and
Sofina Mirza-Reid)