13 March 2006
South Africa’s Industrial Development Corporation (IDC) is planning to invest in at least five projects for the production of fuel-grade ethanol. Announcing the investment on Friday, IDC chief executive Geoffrey Qhena said this was a result of the high rating the corporation has given to the long-term development of the country’s biofuels industry.
Ethanol, a good source of octane in petrol, is an alcohol-based alternative fuel produced by fermenting and distilling starch crops such as grains and sugar.
“This project is saying to people, ‘Let’s look long term’,” Qhena said after an IDC presentation to Parliament’s portfolio committee on trade and industry. “We know fuel resources will be depleted. Let’s look for alternatives in terms of our long-term planning.”
The first ethanol project, worth some R1.3-billion, will be located in KwaZulu-Natal, while the rest will be in the Free State, Northern Cape, Eastern Cape and Mpumalanga.
The IDC initiative follows a number of developments that have boosted South Africa’s fledgling biofuels sector.
In February, Minerals and Energy Minister Lindiwe Hendricks announced the government’s long-term commitment to green fuels, which she said would help job creation and development in the rural areas, reduce damage to the environment and offer South Africa protection from volatile oil prices.
“South Africa imports about 60% of its crude oil requirements, which has economic implications in terms of balance of payments as well as vulnerability to rising crude oil prices,” Hendricks said.
Increasing the use of biodiesel and the volumes of ethanol in petrol “would have macroeconomic benefits for the country”.
Fuel firm Ethanol Africa plans to build a string of maize-to-ethanol plants in South Africa at a total cost of about $1-billion (about R6-billion), partly pegged on the hope that new laws that could make its product mandatory.
The company, formed by a group of maize farmers keen to create a new market for their product, has announced a deal with carbon credits firm Sterling Waterford to build the first of eight bioethanol plants in the Free State town of Bothaville – the heartland of South African maize production – at a cost of R700 million.
It was announced last year that the Energy Development Corporation (EDC), a division of the state-owned Central Energy Fund, was to buy a 25.1% stake in Ethanol Africa.
In addition, the EDC is working with South African fuel company Sasol – which was built on its petrol-from-coal technology – to look into the feasibility of converting soya beans into 100-million litres of biofuel, mostly biodiesel, a year. Biodiesel is a biodegradable fuel for diesel engines made mostly from soya and maize.
The government has appointed task teams to investigate the blending of biofuels into the diesel and petrol pools.