Sumitomo invests in biomass pellet production in Brazil
Japanese Sumitomo Corp. has signed a contract to acquire up to 20% of Cosan Biomassa, a subsidiary of the world's largest sugar and ethanol company, Cosan S.A. Industria e Comercio.
The sale is subject to the prior approval of anti-trust authorities in some jurisdictions.
Cosan Biomassa has developed a fuel pellet made from sugarcane residues, such as bagasse from the sugar mill and straw leftover in the sugarcane field.
The company built a large-scale production plant (annual capacity 175,000 tonnes) last September, which commenced commercial production in December 2015.
"Brazil is already among the largest producers and exporters of agricultural commodities in the world. Pelletised biomass is a new commodity being created to serve the low carbon economy," said Mark Lyra, Cosan Biomassa CEO.
"By making use of sugarcane residues and benefiting from the economic and environmental advantages that the shift to rail logistics brings to the game, Brazil is positioned to become the Saudi Arabia of renewable energy."
Through the participation of Sumitomo, Cosan will increase its exports to Japan and Europe along with increased domestic sales.
There is a potential of 45 million tonnes/year of sugarcane pellets from the sugarcane farms in Sao Paulo state alone.
Sumitomo aims to produce 2 million tonnes by 2025, and as much as 8 million tonens in the future, subject to future growth of the market as well as a satisfactory return.
“Sugarcane's productivity and abundant availability tied to the fact that we are using its residual by-product as a raw material gives us a unique sustainability condition when compared to other biomass sources in the world," said Yoshinobu Kusano, general manager of biomass business at Sumitomo.
Sumitomo regards biomass as a promising source of renewable energy, and started importing biomass fuel for power generation to Japan in 2008.
In addition, Sumitomo's subsidiary Summit Energy Corp. has been managing a biomass power plant and plans to build more.
Sumitomo has been in search of competitive and sustainable resources outside of Japan to supplement domestic biomass resources and to step into the European market, where the bulk of fuel pellet demands exist.