BRAZIL INVESTS IN CARIBBEAN SUGAR AND ETHANOL TO BYPASS U.S. IMPORT TARIFF

My friends at Biopact picked up the story below, which reports on a joint-venture between Brazil’s Coimex and Jamaica’s Petrojam, which have come together to acquire two large sugar factories in Jamaica, Frome and Monymusk.

Biopact lists as the main reason Brazil’s higher productivity in the sugar and ethanol business.

I would add that another incentive would be the U.S. Department of Commerce’s Caribbean Basin Initiative, which allows the export of ethanol from certain countries into the United States without the need to pay the 54-cent tariff per gallon imposed on ethanol exported directly from Brazil.

Biopact reports:

Brazilians going abroad to buy up ethanol plants and to replant sugarcane

Brazilian investors and companies with 3 decades of experience in sugarcane and biofuel production are going abroad to buy up inefficient sugar mills and ethanol plants to convert them into hyper-efficient, streamlined complexes that deliver alternative energy. While they are at it, they re-plant sugarcane lands with high yielding and disease tolerant varieties that were developed over the years through Brazil's extensive sugar cane biotech and genomics research efforts (Brazilian scientists were the first to sequence the sugarcane genome, and the country hosts the largest collection of (transgenic) sugarcane varieties on the planet).

Brazilian ethanol firm Coimex, for example, has joined Jamaica's Petrojam in a joint bid for the country's two largest and most efficient sugar factories, Frome and Monymusk, which together account for 65 per cent of the island's output. If government signs off on the bid, it will form the basis for the partners, who have already acquired land for the development of a second ethanol plant at a cost of US$16 million, to make ethanol feedstock locally. It is estimated that the transformation cost of the factories and sugar lands will carry a US$100 million (J$6.6 billion) price tag. According to the ambassador of Brazil, the project would involve full replanting of the sugar lands to significantly improve cane yields and productivity. This, along with modernisation of the plant, would cost in the region of US$100 million, according to the Brazilian's estimate.

Although the transformation of the factories and land will still focus on the production of sugar, an important element of the project will involve the production of hydrous or wet ethanol locally which could then be dehydrated at the plant located on Marcus Garvey Drive along the city's harbour. Last September, the Petrojam/Coimex joint venture, Petrojam Ethanol Limited (PEL), started production from its 40 million gallon plant located on Petrojam's existing premises.

That investment cost about US$12 million and has since yielded an estimated J$246 million in profit from J$2.25 billion in revenue from 70 million litres (19 million gallon), up to the end of March 2006. The partnership, over the next few months, plans to move into the next development phase in which it will build a 60 million gallon plant at a cost of US$16 million, having already secured the land on which it will be sited further along the Marcus Garvey Drive strip, a location which ensures access to the Kingston harbour.

Follow what's happening in the Brazilian ethanol market on Ethablog, the only blog in English dedicated to Brazilian ethanol.