Brazilian ethanol attracts bioplastics investors

Brazil’s highly developed sugarcane-based ethanol industry is attracting investments in bioplastics, and second-generation technologies are growing strongly too. Yet ethanol makers are grappling with market instability.
Some industry players are confident that biofeedstocks have a promising future. One of the largest polyethylene (PE) producers in Latin America, Braskem, is aggressively pursuing the development of green plastics. In December 2008, Braskem said its board approved the company’s proposed green PE project requiring an investment of reais 500m ($211.5m). Braskem plans to produce ethylene and PE from sugarcane ethanol in a new facility to be built in the Triunfo petrochemicals complex, in Rio Grande do Sul, southern Brazil (see Braskem feature, page 26). The company laid the cornerstone in April 2009. Braskem has already successfully piloted the production of bio-based PE, garnering accolades from the US’s Society of Plastics Engineers.

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The Brazilian ethanol industry has expanded and attracted significant foreign investment in the past three years, but a number of mills are struggling to stay afloat because of volatility caused by the financial crisis.

“This is a complicated moment for the ethanol industry and the main obstacle continues to be lack of credit,” says Luciano Almeida, an official with the Sao Paulo state department of development. According to Almeida, the Brazilian ethanol industry became highly leveraged following a rapid expansion that took place in the past three years. But when credit markets suddenly froze in late 2008, a number of mills were left hanging by a thread.

The slowdown in the economy dealt a huge blow to some of the units that had just begun operating, said Jose Vaz, general manager of SIMTEC, an annual sugar and ethanol industry technology conference in Piracicaba, Sao Paulo.

ICIS