Brazil to Double Corn-Based Ethanol Production in 2018
Ethanol profits are fantastic.
By
Bruno Santos
3/24/2017
Because Brazil’s number one raw material for ethanol production faces seasonal issues, biofuel producers are turning to corn as a more reliable source.
Sugarcane plants historically face a major problem: a shortage of raw material to produce biofuel during the off-season for sugarcane. During this period, the sugar energy sector would lay essentially dormant for four months. The main producing region called the Mid-South, for example, has downtime from December to April, whereas for sugarcane producers in the Northeast region, the off-season runs from May to September. However, in the past five years, plants have found a solution in corn, given that it can produce ethanol uninterruptedly all year-round.
ADVERTISEMENT
Since 2011, Usimat has bet on this alternative, producing corn ethanol in the city of Campos de Júlio, Mato Grosso state. This was only possible because Usimat invested R$ 25 million ($8.3 million) to adapt its infrastructure and become a flex plant (able to process both sugarcane and corn). Operating during the off-season, the company ensures extra income of R$ 70.2 million ($23.4 million). This alternative was so attractive that Unimat did not stop producing corn ethanol and became a source of inspiration for other plants in the state. Using corn, in 2015, Usimat produced 42,000 liters of ethanol during the sugarcane off-season.
OUTPUT CAN BE DOUBLED Currently, there are 10 plants processing sugarcane in Mato Grosso. Of these, three are flex, i.e., they can also use corn to produce biofuel. Akin to Usimat, Libra plants, located in São José do Rio Claro and Porto Seguro in Jaciara, are operating at full capacity. Combined, the three plants have a production capacity of 150 million liters per year.
For comparison, in the period from the start of the current sugarcane harvest up to October 16, the plants produced 21.2 billion liters of sugarcane ethanol, according to data from the Sugarcane Industry Union. Thus, it is clear that, relatively, the volume of ethanol produced from corn is tiny.
However, experts predict that this segment will grow at a rapid pace. According to Glauber Silveira, president of the Sector Committee for Soybeans, a body affiliated to the Ministry of Agriculture, there are two new plants being built in the state, and production is expected to double next harvest. “With these two new processing plants coming online in the 2017/2018 season, production will exceed 300 million liters of ethanol,” stated Glauber.
Boosting corn ethanol production will be feasible with projects such as that of FS Bioenergy. This is a joint venture between Fiagril, suppliers of grain used to produce biodiesel, headquartered in Lucas do Rio Verde, and the North American group Summit, a farm management and agricultural investments company based in Iowa. The building of the plant has reached the final stages, with inauguration scheduled for June 2017.
According to the director-general of the Summit group in Brazil, Rafael Abud, the enterprise will help meet the growing demand for ethanol that cannot be supplied by sugarcane. “The focus of FS Bioenergia is to produce corn ethanol and its coproducts using the latest technology available on the market, which we believe to be the most lucrative move for the region,” he states.
FS Bioenergia is investing R$ 372 million ($124 million) in the plant, which shall have the capacity to produce 220 million liters of ethanol annually. The processing capacity for corn and sorghum will be 1 million tons per year. “Besides ethanol, we will also produce 6,000 tons of corn oil and 60,000 megawatts of electricity to feed the grid,” said Abud.
Another plant under construction is one by Cevital, an Algerian multinational with interests in the food processing, mining, and steel industries. Cevital is investing around R$ 2.5 billion ($0.83 billion) in building its plant in the city of Vera, close to the centers of soybean and corn production in Mato Grosso state, at the cities of Sorriso and Lucas do Rio Verde.
THE PLAN IS TO RAISE PROFITABILITY According to Glauber Silveira, corn ethanol is here to stay in Mato Grosso and Brazil. “Corn ethanol solves two major historical problems: the idle time of plants during the sugarcane off-season and the need to add value to corn, given that the grain produced in the Mid-West, particularly in the northern part of Mato Grosso, is one of the cheapest in the world,” stated Glauber.
To understand how corn ethanol adds value to the grain, Silveira cites production in Mato Grosso as an example. From January to October this year, the state exported around 10 million tons of grain, generating revenues of approximately R$ 3 billion ($1 billion), according to data from the Mato Grosso Institute of Crops and Livestock Economy (Imea). According to Silveira, if this volume of corn were to be processed for ethanol production, it would result in 4 billion liters of fuel.
Calculating overall income, including profit from the ethanol, electricity production, and the sale of DDG (dried distillers’ grain, a high-protein by-product of corn highly valued as livestock fodder), the sector would have made R$ 13 billion ($4.3 billion). “The profits from corn ethanol are fantastic. On top of this, we have growing demand because Brazil is not self-sufficient in fuel and has to import gasoline,” said Silveira. Also according to Silveira, corn ethanol production does not compete with the animal nutrition sector. “For the coming year, Brazilian corn production should be around 85 million tons and consumption about 55 million tons. In other words, we have a surplus of 30 million tons, and we´ll produce ethanol with this excess corn,” said Silveira.
“With yield gains every harvest, Brazil is sure to remain one of the biggest corn producers in the world,” said Ângelo Luís Ozelame, market analysis manager of Imea.
”The profits from corn ethanol are fantastic. On top of this, we have growing demand because Brazil is not self-sufficient in fuel and has to import gasoline,” says Glauber Silveira, president of the Sector Committee for Soybeans.
Brazil’s corn stocks for ethanol usage can grow and still not compete with the needs of the animal sector.
WON´T THERE BE A CORN SHORTAGE? With the climate problems and loss of the second 2015/2016 corn harvest, Brazil experienced an atypical situation: There was a 17-million-ton decrease in production, falling from 84 million tons of grain in the 2014/2015 harvest to 67 million tons in the 2015/2016 harvest, according to a survey by the National Food Supply Company (Conab).
Mato Grosso, Brazil’s highest corn-producing state, saw a decline in production of 5.5 million tons, producing 15.2 million in the 2015/2016 harvest. According to Glauber Silveira, despite this, the corn ethanol plants have no cause for concern. “Even with the loss of harvest this year, we still had surplus corn for ethanol production and also managed to export 12 million tons up to October, a significant volume,” said Silveira. “Also, for the coming year, a high yield harvest is forecast.”
According to Ângelo Luis Ozelame, market analysis manager of the Mato Grosso Institute of Crops and Livestock Economy (Imea), the 2016/2017 harvest should again hit high numbers.
“With the good planting of soybeans in Mato Grosso, which is going ahead at a fast pace, the next harvest should total 23 million tons of corn. We won´t beat the 26 million tons of 2015, but we shall continue to rise in the forthcoming harvests,” stated Ozelame. This expectation of growth was also one of the topics presented at the Congress of the Sugar Energy Sector of Brazil, held recently in Cuiabá. According to the survey by Imea, conducted together with the Brazilian Institute of Geography and Statistics (IBGE), by 2025, the state of Mato Grosso alone will attain production of up to 40 million tons of corn, representing an 81% increase. “With yield gains every harvest, Brazil is sure to remain one of the biggest corn producers in the world,” said Ozelame.
agriculture.com
|
