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SAO PAULO - Brazil's president Luiz Inacio Lula da Silva showcased his country's prowess in the alternative fuels industry today when he opened Barralcool, the first integrated biofuels plant that will produce cane-based ethanol and biodiesel from oilseeds.
Brazil, with its huge agricultural potential, has for decades had the world's most advanced biofuels market. After the oil crisis in the early 1970s, it launched the ProAlcool ethanol programme to lighten dependence on crude imports.
"There are just under 300 sugar-ethanol mills in operation in Brazil but another 60 or more in construction," said Paulo Gaiad, operations manager at Dedini, a leading provider of sugar-ethanol, biodiesel and cogeneration plants in Brazil.
Brazil's sugar cane industry has flourished under extra demand from motorists for cane-based fuel ethanol.
The time has come for Brazil's failing soy and oilseed crushing industries to tap rising demand for biofuels, as consumers worry about global warming and instability in oil exporting countries.
"The worst of the crisis is over," Lula told hundreds of onlookers at the inauguration of the Barralcool plant.
Brazil's soy sector is in its worst crisis in decades due to the strong real against the dollar and high production costs.
The soybean crushing industry, which processes beans into meal for animal feed and oil, has been in serious decline. Multinationals such as Archer Daniels Midland and Bunge have closed several soy crushing plants in the past year or so.
The ethanol-biodiesel plant in Barra do Bugres, Mato Grosso, in the heart of Brazil's centre-west soybean belt, has produced ethanol from surrounding cane fields for over 20 years but Dedini recently constructed the integrated biodiesel plant on the site after investments of 27 million reais ($18.9 million).
"Having the two plants together will provide major infrastructure and energy savings," said Ronaldo Knack, president of consultants BrasilAgro, which will host the International Agroenergy and Biofuel Fair in Brasilia on November 27-29.
Analysts like BrasilAgro estimate that Brazil will invest over US$15 billion in agroenergy in the next five to six years.
Most cane mills in Brazil burn bagasse, or left-over cane stalks, as biomass fuel in on-site thermoelectric, or cogeneration, plants. This creates steam used in refining and distillation as well as for electric energy generation.
The Lula government recently passed legislation that will mandate a 2 per cent blend of biodiesel from oilseed crops like soybean, sunflower or castor bean in all commercial sales of petroleum diesel by 2008 and 5 per cent by 2013.
A few hundred filling stations already blend it. Brazil has about 10 biodiesel plants in operation and another 40 or so in construction, according to consultants Enerbio.
Now, about half of Brazil's massive cane crop has gone to ethanol production with the rest being refined into sugar. The more recent spike in world oil prices has turned an already thriving industry into a gold mine.
Today, motorists can choose to fill up with 100 per cent ethanol at half the price of petrol at over 30,000 filling stations nationwide or opt for petrol which is blended with 20-25 per cent ethanol. Ethanol accounts for 40 per cent of all non-diesel fuel consumption and its market share is growing.
- REUTERS
