Brazil's Vale plans Amazon biofuel plant -report

SINGAPORE, June 25 Sun Jun 24, 2012 10:18pm EDT

SINGAPORE, June 25 (Reuters) - Brazilian miner Vale SA is planning to build the world's largest single processing plant to turn palm oil into biofuel by 2015 in a bid to cut its vast fuel costs and to develop the Amazon region, the Financial Times said on Monday.

Under the project, which will cost more than $500 million, Vale has acquired an area of cleared land in the Amazon rainforest bigger than London. The biodiesel will be used to run the company's machinery, ships, trains and trucks, the paper reported.

Vale opened its first palm oil factory this month in Brazil's Amazonian state of Para and will sell its output to food producers in the market until it the processing plant is completed, Eduardo Ieda, head of the miner's biodiesel company Biopalma was quoted as saying.

Vale will probably break even next year and Biopalma's plant will allow the miner to reduce its huge energy bill by producing biodiesel at a cost that is about 30 per cent cheaper than current market prices, the official was quoted as saying.

Energy accounted for 13.4 per cent of the company's total cost of goods sold last year, according to a recent filing to the US Securities and Exchange Commission, it said.

The project, which is spread out over a total area of 175,000 hectares in Para, is expected to produce about 600,000 tonnes of palm oil a year by 2019, Ieda was quoted as saying.

Last week, Vale also announced plans to invest $315 million jointly with Australia's Pacific Hydro to build two wind farms in Brazil's northeast to help meet the miner's electricity needs. (Writing by Naveen Thukral; Editing by Edwina Gibbs)

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