Toyota to build ethanol mill in Brazil - report

SAO PAULO, Aug 5 (Reuters) - Toyota Tsusho Corp, the trading company of Japan's Toyota group, is finishing studies to build an ethanol plant in Brazil's center-west state of Goias, a local newspaper reported on Tuesday.

Brazil's state-run energy company, Petrobras (PETR4.SA), and local cane producers would be partners in the new mill that would be built in the Itumbiara area, the financial daily Valor Economico said.

"We are in the final stage of this project's economic feasibility (study)," Carlos Ogasawara, a spokesman for Toyota Tsusho board, told the paper.

Toyota Tsusho (8015.T) and Petrobras directors in Brazil were not immediately available to confirm the information.

According to Valor, Toyota and Petrobras would each have a 20 percent stake in the new company. They are now in talks with the local producers, Ogasawara said.

Toyota said last month it would build a new auto plant in Brazil to keep up with surging demand in the country. [ID:nN15325582]

Petrobras plans to export 4.7 billion liters of ethanol per year by 2012. To achieve this, the company intends to sign a total of 20 contracts with local groups and build several distilleries in partnerships.

It signed its first contract with a local ethanol company in May -- its first step into ethanol production -- to build a distillery that will come on line next year, also in Goias.

A new railroad in Goias, part of which is expected to be operational by 2010, has been attracting investments in the region, the state's trade secretary, Luiz Medeiros, told the paper.

He said Toyota had signed a letter of intent with the state but added that investments would still depend on infrastructure, which is seen as one of main obstacles to Brazil's agricultural expansion. (Reporting by Inae Riveras; editing by Reese Ewing and Matthew Lewis)