California-based ethanol producer Stratos Renewables expects stage one of its Estrella del Norte project in Peru to be ready by November 2008, company CEO and director Carlos Antonio Salas told BNamericas.
This stage entails the expansion and conversion of the Estrella del Norte sugarcane mill into an ethanol facility - specifically a mill to process 1,100t/d of sugarcane and a 4Mg/y (15.1Ml/y) distillery.
Stage one also includes developing 500ha of seedling nurseries to plant 1,000ha/month of sugarcane as well as securing land and water, said Salas, a former director of Peru’s national agriculture research institute (Inia).
Salas said the company believes owning their own nurseries would eliminate the company’s dependence on global commodity pricing.
Stage two is expected to start in December and be carried out from 2009-10 and stage three is intended to take place in 2011-12, he said.
These subsequent stages each are intended to add two mills and two distilleries. Stages two and three are expected to bring total ethanol production to 90Mg/y and 180Mg/y respectively.
Stratos has raised roughly an initial US$10mn for the project.
BIOFUELS BOOM
"We believe there are two major factors that explain the recent boom of Peru’s biofuels market," Salas said.
"One factor is the position Peru is in right now compared to the rest of Latin America and in general for emerging markets in terms of having reached a stable macroeconomic environment characterized by low inflation and high growth which is attracting investors," according to the executive.
The country also does not face the difficult political transitions of neighboring countries such as Bolivia, Ecuador and Venezuela, he added.
In addition, Peru has signed a free trade agreement with the US under which Stratos will avoid the US$0.54 duty per gallon that Brazil pays for shipping ethanol to the US, Salas said.
Stratos plans to export the bulk of production to the US, although other markets have been looked at including China and South America.
COMPETITIVE ADVANTAGES
Peru grows its sugarcane on the coast versus other countries that grow the feedstock farther inland, thereby reducing Peru’s lag time for the fuel’s export, Salas said.
Growing conditions in the north are optimum with high levels of solar radiation, hot temperatures during the day and cold temperatures at night and little rain, he said.
"Peru boasts world records of sugarcane yield per hectare."
ENVIRONMENTAL CONCERNS
Salas downplayed criticism that biofuels feedstock plantations displace land used for growing crops.
Stratos intends to use areas where there is little or nothing currently planted, such as desert areas in the north of Peru. "We intend to increase the amount of arable land."
The executive also said the company intends to develop a compost plant to reduce the use of fertilizer and keep production as natural as possible. Stratos also intends to reuse water at mills.
Other companies developing ethanol projects in Peru include Maple Energy (AIM: MPLE) and Pomalca.
David Casallas
Business News Americas
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Originally published by the Business News Americas
