* 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 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.