May 27, 2022

FS Bioenergia Making Major Investments in Corn Ethanol in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Ethanol production in Brazil expected to increase 35% by 2029 according to the Energy Research Company (Empresa de Pesquisa Energetica -EPE) with corn ethanol being a main driving force behind the increase. The company FS Bioenergia is Brazil's first and largest corn ethanol producer and they have major plans to expand their corn ethanol production.

The production of corn ethanol in Brazil increased from 37 million liters in 2013/14 to 4.2 billion liters in 2022/23 and corn ethanol production is expected to reach 10 billion liters in 2030/31. Originally, corn ethanol was produced in sugar mills that had been retrofitted to utilize corn during periods when sugarcane was not available (flex facility), but that changed in 2017 with the inauguration of the first corn ethanol facility (full facility).

FS Bioenergia built the first corn ethanol facility in Brazil in the city of Lucas do Rio Verde in south-central Mato Grosso. This first facility started by producing 289 million liters of ethanol and it has since been expanded over the last five years and it now produces 1.4 billion liters per year.

FS Bioenergia has since built a second facility with a third under construction in the city of Primavera do Leste in southeastern Mato Grosso. Their third facility cost R$ 2.3 billion (approximately $460 million) and it will have a capacity of 585 million liters and it is expected to be operational in 2023. The company has plans to build three more corn ethanol facilities in the state of Mato Grosso bringing their total production capacity in the state to 5 billion liters. In addition to ethanol, these facilities produce corn oil, animal feed, and enough bioenergy to operate the facility with excess energy sold back to the grid.

FS Bioenergia feels there is value to society by producing green fuel. They contend that every liter of ethanol reduces carbon emissions by 80% compared to gasoline. While other countries are betting on electric cars to eventually reduce their carbon emissions, Brazil's automobile fleet already can utilize E100 fuel to reduce emissions.

The company wants to go even further by making a major investment in sustainability. In 2021, the company announced a system of Bioenergy with Carbon Capture and Storage - BECCS (Bioenergia com Captura e Estocagem de Carbono). The new system will be installed at their Lucas do Rio Verde facility. The carbon will be injected 2 kilometers underground into rock structures within a 5-kilometer radius of the facility and it will be monitored long term.

Initial cost of the carbon capture program is R$ 250 million (approximately $50 million) and it will eliminate an estimated 400,000 tons of carbon annually. FS Bioenergia announced that they are pioneers in the field of RenovaBio and the first in Brazil with such a system. When the system is up and running in 2024, the facility will have a zero-carbon footprint. If successful, the carbon capture program could be expanded to the company's other facilities.

FS Bioenergia is a joint venture between Tapajos Participacoes S/A from Brazil and Summit Agricultural Group from the United States.

The Mato Grosso Institute of Agricultural Economic (Imea) estimated that 19% of Mato Grosso's 2021 corn production would be utilized for ethanol production and that number is certain to increase in the years ahead. Mato Grosso is Brazil's largest corn exporting state, but more of the corn produced in the state is being utilized for ethanol production.