January 21, 2013 / 2:40 PM / 5 years ago

Brazil development bank backs cellulose ethanol plant

* 82-mln-liter-per-year plant to open in early 2014

SAO PAULO, Jan 21 (Reuters) - Brazil’s state development bank (BNDES) will invest 600 million reais ($294 million) in bioenergy firm GraalBio’s cellulose ethanol plant slated to open in early 2014, BNDES said on Monday.

BNDES will make the contribution through its investment holding company BNDESPar, it said in an e-mailed statement, to help GraalBio develop second-generation biofuel technologies at the plant in Alagoas in the northeast.

In exchange, BNDES will obtain 15 percent of GraalBio’s shares and a seat on the firm’s board of directors.

GraalBio’s plant, with an annual capacity of 82 million liters (22 million gallons), would be the first second generation ethanol facility in the southern hemisphere, turning non-edible plant material into fuel, BNDES said.

Second generation biofuels are still in their infancy, but are thought to have growth potential as some nations shy away from producing biofuels from food crops, like corn in the United States. High production costs have so far been a major impediment to deploying the technology on a commercial scale.

Danish industrial enzymes producer Novozymes said last May it will supply enzymes for the plant in Brazil.

Brazil is a pioneer in the production of biofuels from sugar cane, a raw material in abundant supply in South America’s largest country that powers its millions of flex-fuel cars.

$1 = 2.04 reais Reporting by Fabiola Gomes and Caroline Stauffer Editing by W Simon

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