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October 27, 2017

Three New Ethanol "Flex" Facilities to be built in Mato Grosso

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

It was recently reported by So Noticias that there will be three new ethanol facilities built in the state of Mato Grosso by the company Cluster de Bioenergia S/A. The company has already allocated R$ 50 million to get the projects underway with the eventual total investment approaching R$ 1 billion.

These facilities were originally envisioned several years ago, but the projects were put on hold when Brazil entered into its worst recession in recent memory. Now that Brazil is emerging from the recession, the company felt it was time to resurrect the projects, but with one significant change.

The three original facilities were scheduled to utilize only sugarcane to produce ethanol, but that has now changed. The three new facilities will be what are called "flex" facilities that will be able to utilize both sugarcane and corn to produce ethanol.

Normally, an ethanol facility that only utilizes sugarcane would close down operations for several months during the rainy season when it is not practical to harvest sugarcane. The shutdown would usually occur during December-January-February, but "flex" facilities do not shut down when sugarcane is not available. Instead, they are capable of utilizing corn (or sorghum) during the period to keep the facility up and running. The facilities that have already been retrofitted to utilize both sugarcane and corn are reporting very favorable results.

Upon completion of the new facilities, the state of Mato Grosso will have 13 ethanol producing facilities including:

  • One corn only ethanol facility, which is the first such facility in Brazil.
  • Nine sugarcane based ethanol facilities.
    • Two of which have already been retrofitted as flex facilities that can utilize corn when sugarcane is not available and a third facilitiy is currently being retrofitted to utilize corn.
  • Three new flex facilities that will utilize both sugarcane and corn to produce ethanol.

The first new Cluster de Bioenergia S/A facility will be constructed in the municipality of Barra do Garcas in western Mato Grosso. The second and third facilities will be constructed in the municipalities of Nova Xavantina in northern Mato Grosso and Agua Boa in eastern Mato Grosso. The second and third facilities in be built in the medium to long term.

These new facilities will utilize a small portion of the excess corn being produced in the state. Currently, there is only one corn-based ethanol facility in Brazil and it is in the state of Mato Grosso. There will certainly be more such facilities built in the state because there will continue to an excess supply of corn in the state.