February 23, 2007

Japan's Marubeni to form biodiesel joint venture in Brazil

Japanese trading house Marubeni Corporation plans to invest US$40 million to form a joint venture in Brazil for producing and marketing a soybean-based diesel fuel.

Brazilian grain trader Agrenco Group would have the remaining 66.7 percent stake in the US$120 million joint firm, to be called Agrenco Bio-Energia Ltd (ABE), Marubeni said in a statement.

The aim is to secure a supply source for biodiesel fuel, global demand for which is expected to increase, in view of rising fossil fuel prices and growing concerns about the need to protect the environment.

Marubeni also aims to secure a supply source for soybean meal, which has been in growing demand in Asia.

Demand for biodiesel fuel is expected to rise in Brazil with the Brazilian government announcing the mandatory 2-percent mix of biodiesel fuel with mineral diesel from 2008.

ABE plans to construct three biodiesel fuel production plants and two soybean oil crushing plants in Mato Grosso, Mato Grosso do Sul and Parana.

The new unit will have an annual production capacity of 400,000 tonnes of biodiesel fuel and one million tonnes of soybean meal, with sales targeted at US$480 million for the initial year.