Why Brasil BioFuels will invest US$400mn in a biorefinery

Brasil BioFuels (BBF) will invest 2.2bn reais (US$410mn) in a biorefinery in Manaus, Amazonas state, focused on green diesel (HVO) and sustainable aviation fuel (SAF). 

With construction scheduled to start in 2023, the plant will have annual production capacity of 500Ml of biofuels made from palm oil harvested in Brazil's Amazon region. 

In partnership with Topsoe, BBF will adopt hydroprocessing technology that allows the gases and liquids from the output process to be recycled and reused to produce hydrogen that will be used in the processing of the new biofuels.

The offtaker is Vibra Energia, the country's main fuel distributor, BBF CEO Milton Steagall tells BNamericas in this interview. He also talks about the investment decision and the company’s plans.

BNamericas: Why did you decide to make the investment in the biorefinery at this time? 

Steagall: The world is focusing its attention on the energy transition. And BBF was created with this perspective, with the objective of substituting the fossil diesel consumed in the Amazon with a renewable product, produced in this same region, with local labor, removing the responsibility of the federal government to create the infrastructure to drain the production from other regions of the country and reducing the burden on the local consumer.  

The palm oil zoning that we built with the government to mitigate deforestation for this crop created the strictest legislation on the planet by allowing its cultivation only in areas that were degraded until December 2007. 

You see: when the satellites show an opening in the Amazon and it’s said that this is deforestation, this is a half-truth, because the zoning in the Amazon foresees the preservation of 80% of the areas, with the possibility of exploiting the other 20%. So, this is within the country's legal system. But, in the case of palm oil culture, new areas cannot be opened for planting. 

[Agricultural research company] Embrapa identified more than 30Mha suitable for palm cultivation, considering relief, topography, soil, humidity, insolation, etc. We invest in this crop to produce bioenergy, but how can we grow if [electric power generation] auctions for isolated systems are restricted? We then thought about green diesel and sustainable aviation fuel, since Brazil is a fuel importer. 

Our proposal is to compete on equal terms, without subsidies, giving the option to supply the domestic market with something renewable, modern, that generates jobs in the country and doesn’t burden society. 

BNamericas: Is the idea to compete with the imported portion of fuels or also with what is produced in Brazil?

Steagall: The barrel of oil is around US$100, so there’s a lot of room for competition there. And if the barrel drops to US$40, US$30, which I don't think will happen, it will be up to the conscience of companies: are they serious about the ESG agenda or is this just a sham?

BNamericas: Who are the potential customers of the biorefinery? Are there already signed agreements?

Steagall: Vibra Energia is the offtaker of this contract. Production of the first module is 500Ml per year. We have flexibility, we can supply with 100% SAF, 100% green diesel, 50/50 ... according to the demand of the market.

And there are a number of other companies that operate in the Amazon region with large diesel consumption, such as Vale, Hydro, MRN, among others. 

BNamericas: How will the project be financed?

Steagall: It will probably be a condominium of banks, led by [development bank] BNDES to put the industrial structure on its feet, which will require 2.2bn reais. 

BNamericas: What’s the current volume of biofuels produced by BBF?

Steagall: We operate a biodiesel plant in Ji Paraná, in Rondônia, with production capacity of 200m3/d, and we’re building a second plant, of the same size, in Manaus [in Amazonas], with financing from [federal studies and projects financing agency] Finep. A plant to produce 300Ml/y of ethanol from corn. 

BNamericas: What’s the growth perspective of your company's production?

Steagall: Palm is one of the most productive oilseeds in the world and yields an annual average of 5t/ha of oil, compared to about 0.6t/ha for soy, the most used seed for biodiesel production in Brazil.

Today we produce about 5t/ha, 200,000t/y of oil. By 2027, we’ll have 120,000 more hectares of palm in Roraima, of which 10,000ha have already been planted, and another 70,000ha in Pará. 

With this, we’ll be able to optimize our production, since the off-season in these two states is complementary, as one is in the north and the other in the south. 

The expectation is to increase our number of employees from 1,000 to more than 12,000 within the next five years.