Wednesday, September 25, 2013

Mato Grosso corn ethanol mill

Growing investment in ethanol production from corn

By Gerson Freitas Jr. and Fabiana Batista | De Sao Paulo
Joao Brito / Value / Joao Brito / Valor

Franz of Fiagril says that corn ethanol is competitive with cane

After much to enhance the economic and environmental advantages of ethanol from sugar cane over that produced from corn on a large scale in the United States , Brazil may be about to replicate - at least partly - the American model .

Given the enormous difficulty to digest the dizzying growth of corn production in Mato Grosso in recent years , entrepreneurs make to take account of the role of plants capable of turning grain into biofuel .

If successful , the strategy can mean an alternative energy source for North Central Brazil , where fuel prices are the highest across the country - and a way to achieve at least part of the still huge potential for expansion of maize production in Mato Grosso .

 Fiagril a soybean crusher national capital , based on Lucas do Rio Verde , plans to invest U.S. $ 100 million 
(R$ 230 million ) to produce corn ethanol by 2015 .

The company plans to build a plant with a capacity to crush 500,000 tons of grain per year , sufficient to produce up to 200 million liters of biofuel .

If completed , will be the first ethanol plant in the country designed exclusively for crushing corn. Currently , two plants of cane sugar in the state - and Usimat Libra Ethanol - are adapted to process the grain .

The intention is to fund Fiagril up to 80 % of the investment from the Fund for the Development of Amazonia ( FDA ) and the Constitutional Fund for Financing the Midwest ( FCO ) .

According to co-founder of Fiagril Marino Franz , the lines have been secured and the agreements should be signed with Banco do Brazil later this year . The expectation , he says, is to start building the plant by April 2014 and complete it in 18 months .

The processing technology to be adopted in the plant belongs to the ICM , one equipment manufacturer from Kansas , USA , that provides for at least one hundred plants in the Midwest .

Currently , Mato Grosso produces just under 1 billion liters of ethanol from sugar cane . Franz says that biofuel corn is competitive with the cane . " With the price of maize at R$ 13 per bag [ minimum price guarantee in the state ] , we have a margin of up to 20 % compared to sugarcane ethanol sold in the state." In Sorriso , the price of corn fell below R $ 8 last week , according to the Mato Grosso Institute of Agricultural Economics (IMEA )

The bill, ponders , takes into account the income generated by a by-product of high added value - DDGS ( abbreviation for Dry Distillery Waste Containing Soluble ) - which can be used as a substitute for soybean meal . Each ton of corn can be transformed up to 400 liters of ethanol and 330 kilos of DDGS .

Amaggi , a company controlled by the family of Senator Maggi also makes plans to build a plant , although it has not completed feasibility studies .

As Maggi , the uncertainty lies in the cost of energy needed to power the plant . " This is our main question mark. Lack of energy balance to account ." Maggi remember that the plants sugar cane generate their own energy by burning bagasse . The corn plants , in contrast, rely on other sources of biomass , such as charcoal and grass .

" This is a problem that each plant will have to solve. Amaggi has 5000 hectares planted with eucalyptus trees , which could be used to fuel our plant at least until we have shale gas , which should happen in a period of ten years , "said the senator, referring to the gas reserves of the state.

Fiagril says it will encourage the planting of 5000 hectares of eucalyptus and grass , through long-term contracts with farmers to feed the plant. The idea is to encourage these crops in areas sandier , unfit for planting grain .

The project financing corn ethanol has been the subject of some polling firms with BNDES , according to information from the Head of Biofuels from state development bank , Carlos Eduardo Cavalcanti .

The executive said that the matter is being discussed internally , but , although the rate institution that makes sense this kind of business before the need for greater supply of liquid fuels in the country , was prompted companies to a more well-founded on the economic conditions of projects .

For farmers , which more than tripled corn harvest the last three years - from 6.9 million to 21.9 million tons - and now rely on subsidies to transport this production , ethanol is seen as a way to give support to increase production - still small relative to the potential of the State .

Only in 2013 /14, the federal government should spend more than R$ 1 billion to support the marketing of grain in the state through direct purchases and grants . " Mato Grosso just do not plant more corn because it has to sell and whom to sell , but do not lose much in planting corn because it is necessary to rotate with soybeans and cotton ," says Maggi .

Senator argues that the cost of amortization of investment in corn ethanol may be less than the cane , since the plants would integrate the current system of agricultural production in the State . " The Americans were very smart in deploying the plants in the fields of grain . Unlike cane sugar, which requires a whole new infrastructure , corn is only necessary to make the plant " .

In less than a decade , the United States increased by more than 100 million tons of corn production just to meet the ambitious targets of ethanol blending with gasoline . However , the American program was supported in a term that in practice , created a market reserve for biofuel .

Without such an incentive , the outlook for ethanol Mato Grosso are far more modest . At first , says Franz , corn ethanol would be competitive in markets such as the states of Mato Grosso , ParĂ¡ , Acre and Amazonas .

According to the National Petroleum Agency ( ANP ) , these countries consumed last year about 2.2 billion liters of gasoline and about 1.1 billion liters of ethanol ( between the anhydrous mixed with gasoline , and hydrous sold to the consumer at the pump ) . It is, therefore, a small market compared to the national order of 20 billion liters , largely fueled by sugarcane mills in the Center- South .