Argentinean biodiesel will get a $900 million boost

by Dave

GreenMomentum –

Despite a drop in global prices for both crops and oil, the Argentinean biofuel industry projections remain optimistic for 2009 as multi-million dollar projects continue to move forward.

Almost 900 million dollars are to be invested in the construction of new biodiesel plants by 2010, as well as in new sugar mill projects designed to position the country as one of the main producers of ethanol in the world.

This figure adds up to 1,200 million if we were to include the 300 million dollars already invested in biodiesel plants already operating in the country.

According to Claudio Molina, executive director of the Argentinean Biofuel and Hydrogen Association, approximately fifteen biodiesel plants have opened, needing a total investment of 282 million dollars since 2006.

These plants have a combined annual production capacity of 1.5 million tons. A significant number of these plants are located in Gran Rosario, Santa Fe province, home to most oil producers in the country.

According to a document published by the Argentinean Chamber of Renewable Energy, by year-end 2008 Argentina’s biodiesel will account for 10% of the world’s production, which will establish the country as the third global producer, with revenue estimated around 1,500 million dollars.

More than 90% of biodiesel exports are destined to the US, even though the final destination may be Europe, which up until November amounted to almost 1 million tons.

In 2010 ten new biodiesel plants are expected to open. According to Molina, the new added production capacity will be of 2 million tons, which will require an investment of 389 million dollars.

Including those plants currently operational and those to open next year, the biodiesel industry will reach an annual production of 3.59 million tons, and a total investment of 671 million dollars.

For Molina, paradoxically, the challenge is conciliate the supply with the domestic market’s demand. As per Law 26.093, starting in 2010, the diesel and gasoline produced in the country should include a 5% mix of biodiesel and ethanol respectively.

“The uncertainty that threatens the domestic supply of biodiesel is directly related to the lack of the legal and fiscal framework needed and implied in 26.093,” said Molina.

The market will demand approximately 800,000 tons of biodiesel and 245,000 tons of ethanol every year. Today, biodiesel exporters are also optimistic about the domestic biofuel market, and are currently putting pressure on the government to issue new resolutions similar to those recently issued for the ethanol industry.

Recent changes to 26.093, included in law 26.334, opened the door for the sugar industry to get involved in the production of ethanol for the domestic market.

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