August 16, 2007 / 12:12 PM / 12 years ago

Mitsubishi plans drive on biofuels output

TOKYO (Reuters) - Japan’s Mitsubishi Corp. (8058.T) aims to take a slice of the growing green fuel market with a planned annual 2 million kiloliters of green ethanol output capacity by 2017, a senior manager told Reuters on Thursday.

The new plants will be in Japan and other parts of Asia, such as Thailand, where supply of feedstock is cheap and ample, said Takashi Miyazaki, a general manager at Mitsubishi’s new energy business unit.

Global demand for biomass ethanol is set to leap to 280 million kl a year by 2030, boosted by policy incentives and new technology cutting production costs, more than six times as much as some 40 million kl currently, according to the company’s forecast based on International Energy Agency data.

“Manufacturing is the most profitable in this field of business as we think supplies will have to catch up with high-flying demand in the next few decades,” Miyazaki said in an interview.

But he declined to elaborate on details of Japan’s top trading company’s investment plans for renewable fuels.

“It’s difficult to sum it up. We understand it takes four to five years to build a facility and five to six years to make profits out of it,” he said. “Also, situations differ from one country to another,” he added.

Mitsubishi in April set up a team of 15 staff to produce and market the three types of green fuel —- biomass ethanol, biomass diesel and biomass pellet —- in Japan and abroad.

In one of the first few deals, Mitsubishi this month invested 300 million yen ($2.6 million) to take a 34-percent stake in a government-backed project to build an ethanol plant with annual output of 15,000 kl on the northern island of Hokkaido.

HELP FROM KIRIN, LION

Kirin Brewery Co. Ltd. (2503.T), Japan’s No.2 brewer, is providing fermenting technology to the Hokkaido project.

Miyazaki also said Mitsubishi plans to produce 1-1.5 million tonnes a year of biodiesel by 2017 after building plants in Asia or in Central and South America.

The volume is compared with 5 million tonnes a year of the existing rapeseed-origin biodiesel market in Europe.

Japanese household goods maker Lion Corp. (4912.T) will provide expertise when Mitsubishi starts its biodiesel projects, he added. Lion has developed technology to produce methylester sulfonate, used in laundry detergents, from palm oil, a major feedstock for biodiesel in Asia.

On bio-pellets used to supplement coal and reduce CO2 emissions, Mitsubishi plans to produce 4 million tonnes a year by 2017, of which domestic output will be 20,000 to 30,000 tonnes.

Global demand for bio-pellets made from wood waste is expected to grow to 150 million tonnes a year by 2030, up from 8 million tonnes currently, according to the company’s estimate.

New energy — green fuel, solar energy and wind energy — is one of Mitsubishi’s focused business segments.

Analysts said investing in unconventional areas is an industry-wide trend as trading firms look for a new source of profit growth.

“I think biomass energy is relatively contiguous with the company’s existing business,” said Ben Wetmore, senior analyst at Mizuho Securities.

$1=116.26 Yen

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