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Brazilian experts believe that, between 2006 and 2014, 73 new refineries will be necessary to meet the growing worldwide demand for ethanol.
According to Mr. Jose Luiz Oliverio, president of Dedini, the largest manufacturer of equipment for sugar and ethanol processing in the world, US$ 4.64 billion will be necessary to build these new units.
Additionally, many existing refineries already have expansion plans. Taken together, new units and the expansion of the ones that are already operational are expected to elevate annual sugar cane milling capacity to an extra 74 million tons by 2010. Expanding existing facilities will demand US$ 1.87 billion over the same period.
“It’s a market that is beginning to grow at a fast clip. Generally speaking, traditional processing plants, whether for sugar or ethanol, have invested very little in the past few years. They didn't start to think about expanding production until 2004, when ethanol gained prominence as a potential world-class fuel,” says the executive.
In 2006 and 2007 alone, 27 new ethanol plants are scheduled to begin operating. In 2008 and 2009, 29 new plants are expected to become productive. “Judging from the number of proposals we are currently processing, we believe that 2006 and 2007 will be very good for business”.
According to Mr. Plinio Nastari, president of Datagro, a private consulting company, current trends in the sugar and ethanol business reveal a dynamic market. “We are talking about extraordinary growth, taking into consideration the risk factors faced by farmers. Once sugar cane is planted, the producer has to wait 18 months for the first harvest”.
Mr. Nastari also points out that it takes some time to set up a processing plant. “You need approval from the Brazilian government’s environmental agency, you depend on local authorities, you need to structure the project financially. Not something that can be done overnight," he says.
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