Brazil’s $1.7 Billion Ethanol Pipeline Seeks License This Month

Cosan SA Industria & Comercio, the world’s biggest sugar-cane processor, and 84 more Brazilian ethanol makers this month will seek authorization to build a 3 billion-real ($1.7 billion) pipeline to ship fuel to a southeastern port from producing areas in Sao Paulo state.

The Uniduto Logistica SA joint venture will request an environmental license to build an ethanol pipeline spanning 600 kilometers (373 miles), more than the distance between New York and Pittsburgh, Chief Executive Officer Sergio van Klaveren said in an interview. It will transport the fuel to a port in Guaruja, in Sao Paulo’s southeastern coast, from Serrana, in the north of state.

Brazil, the world’s biggest exporter of sugar and ethanol made from cane, has more than doubled output of the biofuel in the past six years to 27.5 billion liters (7.2 billion gallons) in 2009, according to industry group Unica. Mills in Sao Paulo state produce about 60 percent of the country’s ethanol.

“The pipeline will solve most of our logistic bottleneck,” Klaveren said by telephone from Rio de Janeiro yesterday.

Uniduto, based in Sao Paulo, plans to start the pipeline’s construction in the first quarter of next year and to begin operations by 2013, when it may sell shares in Brazil, Klaveren said. The Brazilian government’s BNDES development bank will finance 70 percent of the project.

Cosan and Copersucar SA, a trading joint venture between mills that processes almost a fifth of Brazil’s sugar cane harvest, each own 30 percent of Uniduto. The pipeline will transport as much as 70 percent of ethanol output from Brazil’s Center South, the world’s biggest sugar-producing region.

--Editors: Carlos Caminada, Robin Saponar.

source: businessweek