RNCOS

Brazil – Investing Liberally in Ethanol Production

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Source: RNCOS

Brazilian media have reported that by 2012, investment in the ethanol production in Brazil will touch nearly 36 Billion reais, (US$ 18.80 Billion) as new plants will be constructed in the country together with the expansion of existing ones, as published by Macauhub. Presently, Brazil has over 300 ethanol and sugar plants and to construct new facilities, the demand for sugarcane plantation area will rise by around 63% to almost 10 Million Hectares.

According to the industry representing body - Union of Sugar Cane Industries (Unica) - it is estimated that the investment planned through the year 2012 will be three times more than that made between 2002 and 2005 in the sector.

At present, 50% of the sugarcane produced by Brazil is used in the production of ethanol and it is expected to increase to 60% by the year 2012. Enhanced ethanol production will meet the demand in the Brazilian market, where 12% of ethanol is used by the cars and around 85% of the new vehicles are powered by ethanol.

Ethanol production will be raised by over 11% to around 38 Billion Liter through investments coming from both private and public channels, including from foreign lands also. The leading market research company RNCOS has recently published a report on Brazilian biofuel industry “Brazil Biofuel Market Outlook (2007-2010)” that says in 2006, to meet the rising demands stemming from the better performance of flex fuels vehicles and mandatory ethanol blending, around 89 new plants were built to boost the ethanol production. The report further puts forth that during 2007-2010, ethanol production level is expected to rise at a CAGR of 10% in Brazil, thanks to its favorable geographic and climatic conditions (that supports sugarcane production), low cost of production, and the country’s commitment to cut the greenhouse gas emission.

There are a multitude of reasons behind the rising interest in Brazil’s ethanol industry and the most important one is the Brazil’s position as the world’s leading sugarcane producer and manufacturer of 40% of the world’s fuel ethanol.

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