10/10/06 NANJING (Xinhua) -- Austrian company Biolux on Tuesday started construction on a wholly-owned project to produce biological diesel oil in Nantong City, east China's Jiangsu Province.

According to Veit Schalle, chairman of Biolux, the 120 million euros project is the largest-ever agricultural project invested by Austrian companies in China.

The project will process degummed rapeseed oil into biological diesel, a kind of environment-friendly energy source, with a designed annual production capacity of one million tons.

Construction on the first-phase of the project will be completed by the end of 2007, with an annual production capacity of 265,000 tons through processing 700,000 tons of rapeseed.

Located on the bank of the Yangtze River, the new plant covers an area of 200,000 square meters.

Its products will be sold to EU countries and other international markets, sources said.