Make us your home page

U.S. agribusiness seeks $560 million stake in Brazil's biofuels

SAO PAULO — Archer-Daniels-Midland and Cargill are spearheading a push to invest about $560 million in new biofuel refineries in Brazil, a country that already has twice the capacity it needs.

The U.S. agribusinesses have joined Brazilian companies that are expanding facilities in a bet that the government will double to 10 percent the amount of biofuel that must be blended into petroleum-based diesel, driving up demand overnight.

With oil above $100 a barrel, President Dilma Rousseff is looking for alternative fuels to fill trucks' tanks and keep a lid on inflation. Expanding production would also boost the economy of Brazil's impoverished center-west region, where most of the industry is based. The risk is the country will be awash in unneeded biofuel, said Roberto Rodriguez Labastida, an analyst at Bloomberg New Energy Finance.

"There's far more biodiesel refineries online than are necessary," Rodriguez Labastida said. "I wouldn't say it's smart to invest" in any more facilities to process soybeans into fuel.

Brazil demands that diesel sold at the pump contain 5 percent biofuel. Edison Lobao, Brazil's minister of mines and energy, is considering a higher blend rate as long as there's enough vegetable oil that can be processed into fuel. He did not say how much it may be increased.

Doubling the concentration to 10 percent would rocket demand for the fuel and would cut imports of petroleum-based diesel, easing Brazil's balance of trade.

"Brazil is bound to increase the biodiesel blend to 7 percent in the next five months," said Paulo Jose Fuga, a manager at Fuga Couros. The Marau, Brazil, leather maker and meat processor is spending $13.6 million on a biodiesel plant that will process as much as 29 million gallons a year starting in February. He forecast the requirement reaching 10 percent by 2014.

Refiners, which make the fuel by treating vegetable oils or animal fats with alcohol in a chemical reaction, say they need more capacity to keep pace with rising demand for the standard diesel with which it is mixed.

Even without the blending increase, national consumption of the fuel is expected to rise by 6 percent a year over the next decade, according to a Ministry of Mines and Energy projection.

Brazil imported 9 billion liters of diesel last year, according to the secretary of external commerce.

U.S. agribusiness seeks $560 million stake in Brazil's biofuels 05/10/11 [Last modified: Tuesday, May 10, 2011 8:42pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Bloomberg News.

Join the discussion: Click to view comments, add yours

  1. Federal agencies demand records from SeaWorld theme park


    ORLANDO — Two federal agencies are reportedly demanding financial records from SeaWorld.

    Killer whales Ikaika and Corky participate in behaviors commonly done in the wild during SeaWorld's Killer Whale educational presentation in this photo from Jan. 9. SeaWorld has been subpoenaed by two federal agencies for comments that executives and the company made in August 2014 about the impact from the "Blackfish" documentary. 
[Nelvin C. Cepeda/San Diego Union-Tribune/TNS]
  2. Legalized medical marijuana signed into law by Rick Scott

    State Roundup

    TALLAHASSEE — Gov. Rick Scott on Friday signed into law a broader medical marijuana system for the state, following through on a promise he made earlier this month.

    Gov. Rick Scott signed legislation on Friday that legalizes medical marijuana in Florida.
  3. Line of moms welcome Once Upon A Child to Carrollwood


    CARROLLWOOD — Strollers of all shapes and sizes are lined up in front of the store, and inside, there are racks of children's clothing in every color of the rainbow.

    At Once Upon A Child, you often as many baby strollers outside as you find baby furniture and accessories. It recently opened this location in Carrollwood. Photo by Danielle Hauser
  4. Pastries N Chaat brings North India cuisine to North Tampa


    TAMPA — Pastries N Chaat, a new restaurant offering Indian street food, opened this week near the University of South Florida.

    The menu at Pastries N Chaat includes a large variety of Biriyani, an entree owners say is beloved by millions. Photo courtesy of Pastries N Chaat.
  5. 'Garbage juice' seen as threat to drinking water in Florida Panhandle county


    To Waste Management, the nation's largest handler of garbage, the liquid that winds up at the bottom of a landfill is called "leachate," and it can safely be disposed of in a well that's 4,200 feet deep.

    Three samples that were displayed by Jackson County NAACP President Ronstance Pittman at a public meeting on Waste Management's deep well injection proposal. The sample on the left is full of leachate from the Jackson County landfill, the stuff that would be injected into the well. The sample on the right shows leachate after it's been treated at a wastewater treatment plant. The one in the middle is tap water.