Plans to shift into corn ethanol have been made feasible by a combination of tax sweeteners and an ability to piggyback onto existing infrastructure, besides crop flexibility, Sao Martinho said.
The leading Brazilian cane processor into ethanol and sugar - which earlier this week unveiled plans to make the biofuel from corn - said that the scheme would exploit “benefits” of being located close to its existing mill cane in Boa Vista, in Goias state.
“We will not have to invest more in tankage because we are going to use the same that we already have today,” Felipe Vicchiato, the Sao Martinho finance director, said, terming as a “major” fillip the ability to tap into existing storage.
“This is the reason why we do not need to invest in tankage for corn ethanol.”
‘Critical to feasibility’
Furthermore, the project as devised avoids the need to install a boiler, as would be the case with a standalone plant, while “another important advantage… is the tax benefit” offered by Goias state “which is critical to the feasibility of the project,” Mr Vicchiato said.
“Otherwise, it will not take off in Goias state” where, being closer to port, corn prices are higher than in Mato Grosso, where Brazil’s steep costs of transport to export facilities depresses values of the crop.
In Mato Grosso, whose low corn prices have helped it become the centre of Brazil’s nascent corn ethanol industry, the grain sells for “R$20 per bag, a 30% difference vis-à-vis the price of corn in Rio Verde”, at the centre of the Goias grains industry, a little north of Boa Vista.
Corn vs cane
Nonetheless, he cited as another advantage of the corn ethanol project the flexibility of the feedstock, in that – unlike cane, of which Sao Martinho grows a substantial acreage itself – it will not have the same crop commitment.
“If you have a situation in which the price of corn is too high, and makes it infeasible to produce [ethanol], you can simply not process corn that year, and you just half the plant,” Mr Vicchiato told investors.
That is different to cane, which “you have to cut” and process, rather than being realistically able to leave it in the field.
To produce from cane the extra ethanol expected from the new plant – which will have capacity for 200,000 cubic metres of hydrous ethanol and 140,000 tonnes of distillers’ grains (DDGs) – “we would need three times the initial investment, because we would have to plant the sugar cane”.