UK-based TMO Renewables has secured biomass feedstock supply for a planned bioethanol production plant in north-east China, the advanced biofuels firm said on Thursday.

TMO Renewables develops second-generation biofuel from biomass or biowaste, increasingly seen as an alternative to first-generation fuels which drew criticism because they are made from food crops such as maize, sugar cane and rapeseed.

The firm has signed a memorandum of understanding with Heilongjiang province to secure a "large volume" of biomass feedstock supply from the largest state-owned farming corporation in China, Heilongjiang State Farm.

"This is the first step towards building the first of a future series of second generation biofuel production facilities in China," David Weaver, TMO's chief executive, told Reuters.

"We aren't able to say exactly how much (feedstock will be supplied) at this stage, but this deal commands a sizeable potential volume."

The state farm employs almost 1 million people and produces 20.4 billion kg of grain per year.

It is applying for licenses from the Chinese government to set up the biofuel production plant, which will take around 18 months to build, TMO Renewables said.

China produced 2.7 billion liters of ethanol in 2010 and aims to produce 12 billion liters by 2020 as demand for fuel surges.

"Our network in China is growing and we look forward to announcing an off-take agreement for the ethanol produced, another key element that needs to be in place for the delivery of an operational plant in the province," Weaver added.

Earlier this year, TMO started a demonstration-scale project to make ethanol from cassava residue or cassava stalks with a major Chinese food supplier and a Chinese state-owned oil company.