Chinese-Brazilian partnership to build ethanol factories to supply China

27 June 2007

Sao Paulo, Brazil, 27 June – A Chinese company and a Brazilian group have signed an agreement to build two ethanol factories in Brazil, whose production will be totally for the Chinese market, according to BBC Brazil news agency.

China’s BBCA, from Anhui province (southeast China), and Brazil’s Grupo Farias, from Pernambuco state (northeast Brazil), have joined forces to set up the factories, at an investment of 390 million reals (US$200 million), which are expected to go into operation between 2009 and 2010 and will be amongst the ten largest in Brazil.

Each factory in the Chinese-Brazilian partnership should have a processing capacity of 5 million tons of sugar cane (from which ethanol and sugar are extracted) per year.

Now the biggest factories in Brazil are Barra (7 million tons), Sao Martinho (6.7 million), Santa Elisa (5.9 million), Vale do Rosario (5.4 million) and Itamarati (5 million), according to figures from the Union of Sugar Cane Industries (Unica), the main ethanol sector body in Brazil.

The Chinese-Brazilian factories are likely to be built in the Brazilian state of Maranhao (northeast), and initial production will be 800 million liters of ethanol per harvest, which will all be sent to China.

‘It is almost certain that it will be there [Maranhão], as there is a good area for planting cane and the port of Itaqui has the capacity to receive large ships,” the chairman of Grupo Farias, Eduardo Farias told BBC Brazil.

In two weeks the chairman of BBCA Anhui, Li Rong-Jie, will travel to Brazil with a group of Chinese executives to define the last details of the partnership with Grupo Farias.

The Brazilian press has reported that Grupo Farias will have a majority-stake in the partnership and that the taxes on importing ethanol into China were still under discussion.

“We are informing the Chinese government so that it can understand that it needs to lower taxes on ethanol,” Farias said.

According to figures from the Brazilian embassy in Beijing, according to the Chinese government’s tariff table, taxes on alcohol imports can vary between 30 and 40 percent, the agency said. (macauhub)