Nov 05, 2010
Biodiesel Capacity Continues to Expand in Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
In the last several weeks, three large multinational agricultural companies have announced plans to build biodiesel plants in Brazil. Cargill, ADM, and Noble all plan to greatly expand their biodiesel production in the country.
According to Odacir Klein, president of the Brazilian Biodiesel Union (Ubrabio), the one thing all these companies have in common is the desire to add value to the soybean oil they are already producing. These companies have or will have crushing plants that already utilize the soybeans and the use of soybean oil to produce biodiesel simply adds value to their products.
Cargill announced that they will build a biodiesel facility in Mato Grosso do Sul in conjunction with an existing soybean crushing plant. Total cost of the investment is R$ 130 million and the plant should be operational in 2012. The plant will produce 200 thousand tons of biodiesel per year.
ADM will build its second biodiesel facility in Brazil and it will be located in Santa Catarina where it will produce 164 thousand tons of biodiesel per year. ADM already has a biodiesel facility up and running in Mato Grosso in conjunction with one of the soybean crushing plants.
The Noble Group announced plans to invest US$ 200 million to construct their first soybean crushing plant and biodiesel facility in Mato Grosso. The plant will produce 200 thousand tons of biodiesel per year and it should be operational in 2012.
The announcement of these new facilities indicates that the companies feel the demand for biodiesel will continue to grow. The national biodiesel program in Brazil stipulates that vegetable oil must account for 5% of the diesel fuel (B5), but that standard was set a number of years ago and the industry already has the capacity to double the amount of vegetable oil used in making biodiesel. The industry has installed capacity to produce 5.1 billion liters of biodiesel per year not counting the new plants announced recently, but the current mandate is only for 2.4 billion liters. The government is expected to revise their biodiesel mandate in the near future to be at least a B10 blend if not higher.
Currently, soybean oil accounts for approximately 80% of the vegetable oil used in making biodiesel, but the government would like to see that reduced to 70% in the future. The government has been heavily promoting alternative vegetable oils such as palm oil, but it will take many years before any of these alternative oils will be able to compete with soybean oil. In fact, when these new plants come online, soybean oil may account for even more than 80% of the vegetable oil used to make biodiesel.