January 22, 2007 / 9:24 PM / 13 years ago

Brazil ethanol production could be more efficient

SAO PAULO (Reuters) - Brazil is already the world’s most efficient ethanol producer but could still greatly improve productivity by using state-of-the-art technology, a leading equipment supplier said on Wednesday.

A truck is loaded with sugar cane, which will be used in the production of ethanol, in the southern Brazilian state of Parana March 11, 2006. Brazil is already the world's most efficient ethanol producer but could still greatly improve productivity by using state-of-the-art technology, a leading equipment supplier said on Wednesday. REUTERS/Paulo Whitaker

Only 40 percent of Brazilian cane mills produce sugar and ethanol efficiently, and only 5 percent are able to take advantage of energy cogeneration efficiencies, said Jose Luiz Oliverio, senior operational vice president of Dedini Industrias de Base.

“Not even the new mills being installed are choosing the best levels of efficiency that we offer,” he told Reuters during its Global Biofuel Summit.

“That means that it would be very simple for Brazilians to raise efficiency in the process.”

Analysts estimate that Brazilian cane ethanol on average yields over 8 times more energy than is put into the production process, compared with U.S. corn ethanol production that yields between 1.1 to 1.7 times as much energy.

If the 357 sugar and ethanol mills operating in Brazil, to all of which Dedini supplies equipment, were to improve their technology, energy yield averages would be even greater.

Dedini is currently installing 43 new mills in Brazil and will soon begin construction on 55 more projects that have already received final approval from the companies to go ahead.

Dedini is being consulted about the construction of another 189 mills, said Oliverio, who expects that about half of those projects will be executed.

He said the recent fall in oil prices hasn’t reduced the appetite of investors, adding that the main interest of the mills is in the domestic ethanol market.

“There are opportunities in the world sugar market, especially with the reduction of European exports, and there is the enormous global interest for ethanol, but the main interest is still to supply the local market,” he said.

Brazil’s ethanol market has entered a new boom in the last two years since the launch of the flex-fuel car, which can run on gasoline or ethanol. More than 80 percent of the new vehicles sold in Brazil are now flex-fuel cars.

Oliverio said that Dedini is consulting groups, some foreign companies and investment funds that are studying the installation of clusters of three to four mills with the best technology available with the intention of exporting ethanol.

Dedini projects Brazilian cane production at 570 million to 600 million metric tons by 2010, and a 1 billion ton harvest by 2020. According to Oliverio, these figures are used by Brazil’s BNDES development bank.

The average cost of constructing a medium-sized mill in Brazil is $80 million to $120 million, excluding the cost of the land.

Oliverio also said that out of the new projects and the ones being installed, 98 percent will be able to produce both sugar and ethanol and that a major part could also generate surplus electricity to be sold on the market from a cogeneration plant fueled by bagasse, or leftover cane.

Additional reporting by Reese Ewing

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