April 27, 2007

 

China's COFCO to shift away from grain-based ethanol production

 

 

COFCO Ltd, the largest oil and food importer and exporter in China, would now focus on non-grain sources for bio-mass production, including cassava, sweet potato and sweet sorghum, general manager of COFCO's biochemical and bio-energy division, Yue Guojun, said.

 

The announcement was in response to China's latest policies on ethanol-fuel production, which are to develop non-grain alternatives so as not to threaten grain supply.

 

COFCO's 470,000-tonne ethanol production in 2006 accounted for nearly a third of China's total ethanol output.

 

The company is expected to increase fuel-ethanol production to 3.1 million tonnes by 2010, a company official said at the 2007 China International Forum of Corn Bio-Refinery in Beijing.

 

The company, previously known as China National Cereals, Oils & Foodstuffs Corp.has been officially renamed as COFCO Limited, effective as of April 10, 2007.

 

COFCO is expecting its cassava-based ethanol fuel project, with 200,000 tonnes of capacity, to commence operation by the end of the year. The company aims to double the proportion of cassava used in its ethanol fuel production from 10 percent currently to 26 percent by 2010.

 

The company currently uses wheat, corn, cassava and sweet potato to produce fuel-ethanol and is also considering using rice as a raw material.

 

COFCO signed an agreement with China Petroleum & Chemical Corp. (CNPC), Asia's largest refiner, earlier in the month to develop bio-fuel. It also signed an agreement earlier this month with the State Forestry Administration to jointly develop forest bio-energy resources.

 

The company launched China's first cassava-based bio-fuel ethanol project in southwestern China's Guangxi Zhuang Autonomous Region last October, which is expected to reach an annual production capacity of 400,000 tonnes.

 

China is considering large-scale cassava-ethanol production in approximately three years time when production costs drop, an industry expert said.

 

Two problems currently plaguing the industry currently are the high production costs and the lack of land with suitable weather to grow the crop.  Cassava is mainly grown in the southern sub-tropical provinces of Guangxi, Yunnan, Guangdong, Fujian and Hainan in China.

 

The production cost for cassava-ethanol per tonne is currently RMB 6,000 (US$777.17) to RMB 6,500 (US$841.94). The aim to reduce this cost to between RMB 5,000 (US$647.64) and RMB 5,500 (US$712.41) in three years time to make the operation commercially feasible, said Du Fengguang, general manager of Henan Tianguan Enterprise Group Co. Ltd., a major ethanol-producing company in China.

 

China produced 700,000 tonnes of cassava-ethanol in 2006. It used up approximately 5.6 million tonnes of fresh cassava, according to Du.

 

As suitable land to grow the crop is limited in China, COFCO has turned to the Southeast Asian country of Laos for production, where a 50,000-hectare crop harvest is expected within three to five years.

 

COFCO has also developed a production base for cassava and sweet potato in the Chinese city of Nanyang, Henan Province.

 

Meanwhile, China National Petroleum Corp.'s first bio-fuel project in the city of Nanchong in China's southwestern Sichuan Province will produce bio-diesel within the year.  The project would produce 100,000 tonnes of ethanol annually by 2010 using physic nut, a company official with the Nanchong subsidiary, said.

 

Ethanol-fuel is widely used in Henan, Anhui, the northern provinces and to a lesser extent in the central provinces.

 

The growth in ethanol production using alternative crops would be phenomenal, analysts said.