Associated British Foods has ­announced that it is to build a £200m biofuel plant in the UK with BP and DuPont, a move which will make ABF the major producer of biofuel in the UK.

ABF and BP will each hold 45% of the joint venture and science company DuPont will hold the remaining 10%, subject to regulatory approval.

The plant will produce bioethanol from wheat at BP’s chemicals site at Saltend, Hull, from late 2009. Its capacity will be 420m ­litres (330,000 tonnes) of bioethanol per year.

ABF’s Frontier Agriculture business is set to arrange the supply of locally grown wheat. The major co-product of bioethanol production, distillers’ grain, is set to be sold to ABF’s AB Agri business. And it will use its sales and marketing business, which sources and develops co-products from the food, drink and energy industries, to market the distillers’ grain as an alternative feed for livestock.

The announcement follows the investment by ABF’s British Sugar to build the UK’s first bioethanol plant at Wissington, Norfolk. Its capacity will be 70m litres (55,000 tonnes) of bioethanol a year, ­using sugar beet as a feedstock. The plant will start production next month.

George Weston, chief executive of ABF, said: "This exciting project will make ABF the major producer of biofuel in the UK. Its announcement reflects our confidence in our sugar and agricultural businesses, in our partners BP and DuPont, and in the government’s commitment to biofuel production."

ABF said it expected a return on its investment ahead of its cost of capital in the first full year of operation.