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					ABIOVE




         Biodiesel economics in Brazil - May 2005
                                   ********
                      Biofuels Seminar - S.Paulo - Brazil
                          Brazil - Germany Chamber


         Jose Zilio
         Director of Technology & Innovation
         Bunge Alimentos S.A.
         May 20th, 2005
         Club Transatlântico



                                           Brazilian Vegetable Oil Industries Association
         A global vision

ABIOVE          The sun, without charging us, converts its energy to 120 billion
                ton/yr of plant organic matter (wood, plant foods, meat, milk,
                fiber, etc) through photosynthesis.

         HANPP = human appropriation of net primary production (NPP)




                                                                                               NASA
                Humans appropriate 20% of that organic matter , unevenly.
                Several populated countries across some continents consume much
                more than what they can get from surrounding land.

                                              Brazilian Vegetable Oil Industries Association
         Regional deficits have to be solved. But how ?
                  •During this Seminar we are sharing information on biodiesel,
ABIOVE
                  a newcomer and renewable fuel in Brazil.
                  •A 30 year’s learning curve of the successful Brazilian Pro-
                  Alcohol Program should help us to avoid pitfalls

                                    Soybea
                                          n




                                                                      an
                                                                   ybe
                                                                 So
                               Etha
                                   nol
                                                                                           NASA

                   •However, right now, it seems Brazilian biodiesel program
                   has stuck in quicksand
                   •Brazil may need help from outside to move out
                                              Brazilian Vegetable Oil Industries Association
              Why oilseeds crushing companies support Brazilian
              biodiesel program ?
ABIOVE




                                                                                Soybean




                                                                              Soybean Oil



                    % growth


                                                                                  Petrodiesel
                               SBM


                                     SBO



         •Soybean meal demand has a higher growth than vegetable oils in the global market
         •Brazil has a large surplus of vegetable oil and a chronic deficit of petrodiesel
                                                    Brazilian Vegetable Oil Industries Association
         A new demand for vegetable oils is key for all major
         vegetable oil businesses
ABIOVE




                                                                   •Demand may be either
                                         local                     in origination countries
                                                                   or abroad
                                        market

             % growth

                        SBO- Fuel   ?

                                          Vegoil/                          export
                                          biodiesel
                           SBO- Food




                                        Brazilian Vegetable Oil Industries Association
                     Why Brazilian biodiesel program is not moving faster ?
                          •Petrodiesel has a special low price in local market supported by overpriced
ABIOVE
                          gasoline
                     2500
                                                                                                                       Pump prices

                     2000



                     1500
                                    1080
         US$ / ton




                                                        741                633
                     1000


                                                                                             166
                      500
                                    857                                    782
                                                        713
                                                                                             567
                                                                                                             446
                                                                                                                              349

                        0
                             Diesel - UK             Diesel -        Diesel - France   Diesel - Brasil   Soybean Oil       Palm Oil
                                                    Germany                                                 FOB           FOB Malásia
                                                                                                         Paranaguá

                                             Cost w/o Taxes                                         Taxes

                     Fonte: F. O. Lichts, ABIOVE, ANP, PORIM (Jan/2005)

                                                                                 Brazilian Vegetable Oil Industries Association
         Why Brazilian biodiesel program is not moving faster ?
ABIOVE

         Biodiesel – 400 tpd Factory
         ex-factory (wo/ taxes)
         R$/L 1,80
                                                                      2,30
              1,60

              1,40
                       1,19                        1,19
              1,20                   1,12
                                                    0,22 Taxes
              1,00

              0,80                                  0,97
                                                                                    Break-even
              0,60                                  Ex-Refinery
                                                                                    Soybean Oil
                                                    Price
              0,40                                                                  US$ 410/t

              0,20
                     Biodiesel     Biodiesel      Diesel            Biodiesel
                       S/SE           CO          Brasil              UE
                         2005 Estimated         Average Price
                     Soybean Oil – US$ 480/t   jan to mar/2005
                                                 Brazilian Vegetable Oil Industries Association
         Why Brazilian biodiesel program is not moving faster ?
ABIOVE   •Vegetable oils are traded in commodities Boards surfing freely in their own waves.


                                                                     Raw material: Soybean Oil price
                          Soybean Soja
                         Óleo de oil
                         Média 2000-2001
                          Avrg 2000-2001                              (FOB Paranaguá-US$/t)                    700
                          Avrg 2002-2004
                         Média 2002-2004
                          Avrg 2000-2004                                                      648
                         Média 2000-2004
                                                                                                               600


                                                                                                       494
                                                                                                               500

                                                                                                       479

               377                                                                                     421 400

                                                        313                                                    300

                           270
                                                                                                               200
            jan-00             jan-01              jan-02            jan-03            jan-04


             Fontes: Bolsa de Chicago - CBOT / ABIOVE


                                                              Brazilian Vegetable Oil Industries Association
            Why Brazilian biodiesel program is not moving faster ?
ABIOVE              •Both petroleum and vegetable oils have volatile prices, however...
                        • Fossil fuels prices (diesel) in Brazil do not follow petroleum pattern




              Petroleum Prices (1986-2004)                                      Soybean Oil Price (1995-2004)
                    Cushing, OK WTI Spot Price FOB ($/bbl)
                    Europe Brent Spot Price FOB ($/bbl)                                 Soybean Oil (cents/libra-peso)
             45     Long Term Trend                                            40
                                                                                        Long Term Trend
             40                                                                35
                                      Long-Term                                                               Long-Term
             35                                                                30
                                      Trend                                                                   Trend
             30
                                                                               25
             25
                                                                               20
             20
                                                                               15
             15
             10                                                                10

             5                                                                 5

             0                                                                 0
             1986     1989        1992        1995        1998   2001   2004    1995   1996   1997    1998    1999       2000   2001   2003   2004

         Source: Spot price Mexico Gulf, IPE and CBOT
                                                                           Brazilian Vegetable Oil Industries Association
         Alternatives to help Brazilian Biodiesel Program
ABIOVE

         •Full tax exemption for biodiesel
         •Alternative raw materials
             •Forrage grains (second crop)
             •Soapstock
                 •enzymatic transesterification
                 •ethanol (reactant & solvent)
         •New technologies
             •Direct transesterification on oilseeds
             •Compact automatic plants for “in house” production/use
                 •sugar mills
                 •large oilseeds farmers
                 •cooperatives
             •Novel technologies: “star war”

                                     Brazilian Vegetable Oil Industries Association
                    Direct transesterification (Petrobrás)
ABIOVE




                                                                                Catalyzer
                Castor
                bean



         Solids/hulls



                                                                                Biodiesel
              Ethanol                                                           Glycerin



                                     Patent Petrobrás - Carlos Khalil et alli



                                               Brazilian Vegetable Oil Industries Association
            Low speed/large tank reactor process
ABIOVE


         Oil/Fats/soaps         Enzymes

           Ethanol




                                                                                     Biodiesel




                                                                                  By products


                                          Brazilian Vegetable Oil Industries Association
         “Star war” technologies
ABIOVE




                                                heterogeneous catalyst
               microwave




                                                        ultrasonic



                                   Brazilian Vegetable Oil Industries Association
         How Germany, by enhancing its strengths, could work
         to speedup biodiesel programs ?
ABIOVE




         •Revision of biodiesel standards to accept other vegoils as
         raw material
         •Transesterification of European surplus of soybean oil
         •Develop tailor made technologies as alternatives to
         present ones (non economical or capital intensive)
         •Rethinking present strategy for biodiesel.
             • political > scientific approach
         •Rethinking present trade strategy:
             •importing palm oil
             •re-exporting soybean oil (GMO past scars)
         •Financing biodiesel plants abroad (to attend local/export
         demand)
                                      Brazilian Vegetable Oil Industries Association
         How Germany and Brazil could work together to
         speedup biodiesel program ?
ABIOVE




                             Demand
                           E
                Ca Vege thanol                       Ca
                  rb      tab                           p
                    on        le o               Dem ital
                       cr         il                  and
                         ed                 Engi
                                                 ne T
                            its                       echn
                                          Process T        ology
                                                    echnolog
                                                              y


                 Thank you



                                       Brazilian Vegetable Oil Industries Association

				
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