CARGILL, the US agriculture conglomerate, says it plans to become a leading exporter of Brazilian cane-based ethanol as world demand for the fuel and the country's sugar cane crop grow, Reuters reports.
The company, responsible for a large part of Brazil's sugar exports, plans to install a dehydration plant in the Caribbean to avoid a tariff on ethanol imported into North America.
"We are preparing to operate in this market," said Francisco Vassellucci, director of trade in Brazil for Cargill Sugar.
"There is a growing demand for ethanol and there is no way we can sit on the sidelines."
Ethanol is an alcohol-based alternative fuel that can be produced from plants such as sugar cane and corn. It is used to increase octane and improve the emissions quality of petrol, possibly reducing dependence on crude oil.
Demand for ethanol in the US has grown rapidly since the petroleum-based oxygenate fuel additive MTBE began to be phased out of the gasoline supply because of its threats to human health and the environment.
With the growing US market for ethanol in view, Cargill with partner Crystalsev began planning to install a dehydration plant in the Caribbean that would convert hydrous ethanol to the anhydrous variety.
The anhydrous ethanol, if distilled in the Caribbean, would be free of a 54-cents-a-gallon tariff put on the fuel if it enters the North American market directly from Brazil. The tariff made ethanol imports into the US not viable, Mr Vassellucci said.
Cargill and Crystalsev have found a site and will invest roughly $ 8m by the end of this year, when the plant will go on line. In the first phase it will be able to process 240m litres a year, Mr Vassellucci said.
The largest privately held US company, Cargill already produces corn-based ethanol in the US and distributes the fuel in Europe and Asia.
In Brazil it aims to export 100m litres of ethanol this year, of which a large part has already been acquired from mills in the centre and south of the country.
"We account for 23% of Brazil's sugar exports. Now we are going to position ourselves to take a slice of the ethanol market," Mr Vassellucci told Reuters.
The moment is right for the product, especially Brazilian cane ethanol, which is far cheaper to produce than com- or grain-based ethanol. Cane ethanol is cheaper to produce than gasoline if oil is above roughly $ 20 a barrel.
World oil prices neared $ 40 a barrel this week on concern about possible supply interruptions due to terrorist attacks on leading world exporters such as Saudi Arabia when world demand, especially from China, is strong.Lloyd's List
