Brazil's BNDES bank throws more money at GranBio ethanol plant
* Plant to be Brazil's first for 2nd gen ethanol
* BNDES investment arm also owns 15 pct stake
* Other firms also investing in cellulosic in Brazil
SAO PAULO, May 8 (Reuters) - Brazilian development bank BNDES approved a 300.3 million real ($150 million) loan for the second generation ethanol project of the local GranBio Investimentos Group, which would be the first commercial-scale cellulosic ethanol plant in the country.
The bank's investment arm, BNDESPar, announced in December that it would take a 15 percent equity stake in the project for 600 million reais.
The plant, which will be built in the municipality of São Miguel dos Campos in the northeastern state of Alagoas, will produce 82 million liters of ethanol a season using cane bagasse as a biomass feedstock.
GranBio plans to develop green plastics as well as biofuels and enhanced genetic material for sugar cane varieties with the project. The 100 percent Brazilian-owned company acquired a 25 percent stake in April in the U.S. American Process Inc, giving it access to the company's biomass processing technology.
Research into cellulosic ethanol production has made major advances in the laboratory over the past decade but the new technologies have not been fully tested on a commercial or industrial scale, which raises the stakes for investments in plants at this stage.
The first plants to produce large volumes of cellulosic ethanol will get a premium for their product. But chemical engineers currently hammering out designs for new second generation ethanol plants say many of the first commercial cellulosic plants built may be obsolete or unsustainable in a matter of a few years.
Brazil's sugar cane ethanol sector has announced a slew of new investments into building cellulosic ethanol plants in the past several months, including eight plants by Raizen -- the joint ventures between Brazilian sugar and ethanol giant Cosan and oil major Royal Dutch Shell.