Oil Report

China's Guangxi to fill cars with ethanol in Dec

BEIJING, Sept 19 (Reuters) - China’s southern region of Guangxi will start blending 10 percent ethanol into gasoline for cars in December, adding to the nine other provinces in the country using the biofuel in the past few years.

An official at the Guangxi Development and Reform Commission told Reuters it was preparing to start using fuel ethanol as a biofuel plant would come on stream.

China Agri-Industries Holdings Ltd 0606.HK, a listed arm of state-owned agricultural group COFCO, is building the plant, which can manufacture up to 200,000 tonnes of fuel ethanol a year from cassava, also known as tapioca.

China, the third-largest ethanol producer after Brazil and the United States, plans to blend 2 million tonnes of ethanol into gasoline by 2010, up from 1.02 million tonnes currently.

The Guangxi plant will be the first major fuel ethanol producer using cassava. Other four plants use corn or wheat.

While Beijing has promoted biofuels to reduce its reliance on imported oil, it is shifting non-food feedstocks for biofuels for fear they might undermine the country’s food security.

But traders and industry officials said the COFCO plant in Guangxi might squeeze cassava supply, raising the country’s need for imports of the crop from Vietnam and Thailand.

They estimated the plant alone would need to import at least 300,000 tonnes of tapioca chips a year if it was to operate at full capacity.

“The plant can cover only a third of it needs locally,” said one executive from a plant in Guangxi manufacturing food-grade ethanol.

Guangxi, the country’s top cassava grower, can grow cassava only three months between November and January. The crop has to compete with sugar cane over land in the region, also the country’s top sugar-producing area.