Brazil’s burgeoning corn ethanol industry received another boost when cane crusher Sao Martinho revealed RS$350m plans to expand into making the biofuel from the grain too.
São Martinho, which produced 1.10m cubic metres of ethanol from cane during the year to March, said that it had agreed a “protocol of interest” with the Brazilian state of Goias to build a corn ethanol plant, with annual capacity of up to 200,000 cubic metres a year.
The plant would be attached to Sao Marthino’s existing Goias cane mill, Boa Vista, which processes about 5m tonnes of crop a year.
And it would represent a first for Sao Martinho, whose cane ethanol output has up to now been all from cane.
And it would extend too the spread of Brazil’s corn ethanol industry from its heartland in Mato Grosso to Goias, where Cargill, for instance, has a so-called “flex” plant able to make the biofuel from corn or cane.
Sao Martinho’s announcement comes two years after the launch of Brazil’s first ethanol production plant, in Mato Grosso, operated by FS Bioenergia, a joint venture between Brazil’s Tapajos and US-based Summit Agricultural Group.
FS Bioenergia has already doubled capacity at its initial plant, built a second site and unveiled plans for three more, all in Mato Grosso, Brazil’s top corn-growing state.
Paraguay’s Inpasa, which operates two corn ethanol plants in its native country, is set to start a Brazilian plant next month.
One of the appeals of Mato Grosso as a site for corn ethanol plants is that - besides being a major corn grower, expected by Conab to produce 30.4m tonnes of Brazil’s 97.0m tonnes of production in 2018-19 – it is far from ports.
This means that Mato Grosso supplies require a hefty transportation charge to make it for export, depressing in-state values of the grain, which state research institute Imea reported last week at R$22.05 per 60-kilogramme sack.
Values in Sao Paulo, nearer port, ended last week at R$37.79 per sack, according to Cepea.
Furthermore, with Mato Grosso boasting the biggest cattle herd of any Brazilian state, with roughly 30m head out of a total of some 220m, there is ready demand for the high-protein distiller’s grains (DDGs) made by the ethanol plants as a byproduct.
Goias is a neighbouring state to Mato Grosso, and also a major corn grower, with output forecast by Conab at 9.87m tonnes, ranking it fourth after Parana and Mato Grosso do Sul also.
Sao Martinho said that its planned Goias plant, which would also produce 140,000 tonnes of DDGs a year, was linked to tax incentives offered by the state.
“The execution of the protocol does not bind the company to the construction of the project, but rather formalises its intent to expand its industrial activities in the state,” the group added.
Sao Martinho share stood up 1.05 at R$19.96 in afternoon deals in Sao Paulo.