Thai Sugar and Ethanol companies step up investment

Thai sugar and ethanol companies are stepping up investment both to meet growing domestic demand for biofuels, and also capturing markets in neighbouring countries, such as Cambodia and Laos. They are also diversifying into power and electricity production, as well as earning carbon credits from these sectors.

In Thailand, sugarcane and tapioca are emerging as the key raw materials for biofuel, especially for the E85, a mixture of 85% ethanol and 15% petrol, which the government hopes will ease the cost pressures on motorists while boosting the farm sector. Currently, the Asian agricultural giant produces about 70 million tonnes of sugarcane and 28 million tonnes of tapioca annually. As a net exporter of both crops, there has been little, if any, pressure on domestic supplies as far as the food sector is concerned. On the other hand, farmers appear to have gained a better price for their crops and look forward to expanding their acreage to tap the new demand for biofuel crops.

Currently, the Thai ethanol industry has licences to produce over 10 million litres per day, but actual output is still less than 2 million litres, leaving considerable scope for further expansion to meet growing domestic and export demand. Khon Kaen Sugar Industry (KSL) said it expects revenue for its 2008 business year to exceed $292 million, thanks to the strength of its sugar and ethanol business. The company currently operates four sugar plants in Thailand, and an ethanol plant with a daily production capacity of 150,000 litres. KSL is now financing sugarcane plantations and processing plants in Cambodia and Laos, both scheduled to start operations next year. From 2010, both projects will produce around 50,000 tonnes, or 30% of their total capacities.

KSL is also eyeing earnings from increasing its biomass production and fertiliser production, doubling its power plant’s output to 40 megawatts. As its biomass power plant received a United Nations clean development mechanism (CDM) certificate for cutting carbon emissions by 40,000 tonnes a year, from next year KSL could earn US$1 mln a year trading carbon credits. A second power plant will also be built by early 2010.

The huge potential for Thailand’s sugar and ethanol sectors will be discussed by leading industry experts at F.O. Licht’s Sugar and Ethanol Asia conference, held in Bangkok from 26-27 November 2008. Top representatives from the Thai Sugar Millers Corporation, the Thai Cane and Sugar Board, the Thai Ethanol Manufacturers Association, and the Thai Roong Ruang Group will all be present, providing the latest information and forecasts for future growth.

Speakers from Australia, China, Indonesia and Pakistan will widen the debate to the regional and global contexts and further opportunities for investment and expansion in the fast-expanding Asian economies. Vietnam will also be represented by Dang Xuan Tho, Deputy General Director of state-oil firm Petrosetco. Vietnam is becoming a major destination for ethanol plant investment, with pilot projects for testing biofuel launched in Hanoi during September. At present the biofuel is imported from Brazil, so several companies are now planning domestic production capacity to meet rising demand.
source:farminguk