Ethanol Africa forges ahead

15 May 2006

Ethanol Africa, South Africa’s first “green fuels” company based in the country’s maize-producing heartland around Bothaville in the Free State, is forging ahead with its plans to produce environment-friendly biofuels.

The company has announced that a German firm is to build its first bioethanol plant, it has already ordered a patent-pending Corn Oil Extraction System from the Veridium Corporation in the US, and plans to list on London’s alternative AIM stock exchange in November 2006.

Biofuel is set to become a mainstream world commodity as soaring crude oil prices create a market for “green” fuels produced from renewable resources such as sugar, maize and soya beans.

Ethanol Africa was set up by a consortium of maize farmers as a solution to grain supluses. Sterling Waterford, the environmental finance group that listed the world’s first carbon-credit product on the JSE last year, recently bought a 50% share in the company.

Full production by 2007
Ethanol Africa plans to spend R7-billion on a biofuels manufacturing project, building eight R700-million plants in the Free State, North West and Mpumalanga.

Uhde, a subsidiary of German group Thyssenkrupp Engineering, will build the first plant in Bothaville, Ethanol Africa announced on Tuesday. The plant should be in full production by the end of 2007 and be able to produce 473 000 litres of alcohol from 1 125 tons of maize every day.

In late April US company Veridium Corporation said it had received an order from Ethanol Africa for the use of its patent-pending Corn Oil Extraction System at the new plant. The system extracts high-grade maize oil from an ethanol byproduct called distillers dried grain.

Ethanol Africa announced earlier that it has established a programme to secure crops for bioethanol production, whereby farmers would be financed by Ethanol Africa to produce maize. Some 100 000 hectares of maize is to be contracted at each plant.

London listing
On Tuesday the company also announced that would list on London’s Alternative Investment Market (AIM) in November this year in order to finance its manufacturing plans, hoping to raise about R1-billion.

“We intend to list on the London exchange to raise funds for current and future projects,” Sterling Waterford chief executive officer Gregor Paterson-Jones told Reuters.

“With the price of oil where it is, ethanol is emerging as a viable alternative. Investors are getting more excited about it, and here in South Africa we are expecting oil companies would be required by law to use up to 10% of ethanol blending.”

Ethanol Africa says its manufacturing initiative could supply up to 12.5% of the country’s fuel needs by 2015, and that the Department of Minerals and Energy is at the forefront of developing a viable biofuels industry in South Africa.

Environmental & socioeconomic benefits
The industry has been identified as one of the key sectors under the government’s Asgi-SA growth strategy, as it – together with business process outsourcing and tourism – has a good potential for growth and job creation.

The government is investigating the mandatory blending of ethanol into the petrol pool. Currently, it may be blended voluntarily into petrol at a of 9%.

Bioethanol can be produced for R2.50 a litre, while the basic local fuel price has soared to over R6 a litre.

Bioethanol’s environmental credentials go further than being produced from renewable resources. The fuel 60% less emissions of carbon dioxide – a greenhouse gas – than crude oil, and five times less than oil produced from coal.

And its manufacture also has significant socioeconomic benefits. The production of biofuels, including ethanol, creates about 100 more jobs than crude-oil refining.

A national study of the social advantages of the bioethanol industry alone – based on a 10% blending ratio – found that the production of fuel can support 35 000 additional jobs, or protect such jobs.

The number of jobs that can be supported or protected is about the same as the total number of assemblers employed by the motor industry.

The government’s aim is that biofuels should account for 40% of South Africa’s renewable energy, to achieve the target of 10 000 GWh of renewable energy by 2013.

SouthAfrica.info reporter

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