July 14, 2006

 

China COFCO to set up ethanol plant in Inner Mongolia

 

 

China National Cereals, Oils and Foodstuffs Corp., the country's largest foodstuffs trader, plans to invest RMB1.2 billion (US$150 million) in a project to build an ethanol plant in China's Inner Mongolia Region, according to a company official Friday (Jul 14). 

 

The project and two other yet-to-be built plants are expected to boost China's overall ethanol output capacity by 800,000 tonnes a year, or 80 percent.

 

China is the world's third-largest producer of ethanol fuels, after Brazil and the US, with annual output of ethanol-blended gasoline at 10.2 million tonnes.

 

Earlier this month, COFCO officials said the state-owned trading company is looking to set up a 300,000-tonne/year ethanol plant in northern Hebei province and a 200,000-tonne/year ethanol plant in southwestern Guangxi Zhuang Autonomous Region. The two plants are expected to require investment of RMB1.2 billion (US$150 million) and RMB865 million (US$108 million), respectively.

 

The latest project thus brings COFCO's planned investment in new ethanol plants to around RMB3.27 billion (US$408 million) to date.

 

"The (Inner Mongolia) ethanol factory will have a capacity to process 1 million tonnes of corn into 300,000 tonnes of ethanol annually," said a COFCO official, who identified himself only by his surname Ding.

 

The plant will be located in Chifang, a major corn-producing area in Inner Mongolia.

 

"COFCO has reached an agreement with the government of Chifang to set up the ethanol plant with a total investment of around RMB1.2 billion," Ding said.

 

Construction of the plant, scheduled to begin in early 2007, will take around one year.

 

"Its main customers will probably be China Petroleum & Chemical Corp. (SNP) and China National Petroleum Corp," Ding said.

 

The Chinese government is encouraging the development of renewable energy sources in the hope of reducing the country's reliance on imported crude oil. To that end, it is providing financial assistance and promising tax waivers for biomass energy projects.

 

The country's four major ethanol producers - Jinlin Fuel Alcohol Co., Heilongjiang China Resources Alcohol Co., Anhui Fengyuan Biochemical Co. and Henan Tianguan Fuel Ethanol Co. - based in Jilin, Heilongjiang, Anhui and Henan provinces, respectively, have a total capacity to process 3 million tonnes of corn annually to produce around 1 million tonnes of ethanol.

 

COFCO is the parent of Jinlin Fuel Alcohol and Heilongjiang China Resources Alcohol.

 

Listed on the latest 2005 Fortune 500, the trading company is also the parent of COFCO International Ltd. (0506.HK).