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South African company lifts lid on billion-dollar bio-fuel plant
By Leon Engelbrecht
AFP
BOTHAVILLE, South Africa
Petroleumworld.com 07 26 06
A South African company on Tuesday unveiled plans for the continent's first billion-dollar factory to make bio-ethanol from maize, as Africa raced to find alternative energy sources in the face of soaring oil prices.
The Ethanol Africa plant, located in the small town of Bothaville in the country's central Free State province is expected to be in full production next year, making up to half-a-million litres of bio-ethanol a day.
"The bio-ethanol industry is the largest single economic development in the Free State since the inception of the gold mining industry (50 years ago)," said Ethanol Africa's chief executive Johan Hoffman.
"Declining oil reserves in world has left open a market gap for biofuels," he said at a ceremony, marking the construction of the 30 hectare (74-acre) plant in the town, situated about 225 kilometres (140 miles) southwest of Johannesburg.
An alcohol, bio-ethanol is made from maize, wheat, beetroot or sugar cane and is used as a blend component in fuel in the United States and Europe. It increases octane production while giving cleaner emissions.
A country like Sweden for instance has the world's largest ethanol bus fleet, while the European Union in 2005 urged a consumption target of two percent for biofuels and other replacements for petrol and diesel.
Hoffman said the Bothaville plant, the first in Africa, was the prototype of seven more that would be erected in future years and which by 2015 was expected to supply 12.5 percent of the country's fuel needs -- adding to the 40 percent already produced synthetically from coal and gas.
The plant was expected to have a turnover of 550 million rands (78 million dollars, 62 million euros) a year and would add 0.05 percent to the country's gross domestic product (GDP), he added.
Hoffman said that contrary to popular belief, he was convinced bio-ethanol could be produced at less than 90 dollars per barrel.
"I have international statistics at hand that clearly show profitability at prices lower than 50 dollars per barrel," he told reporters.
"Given the increase in the demand for both bio-fuels and fossil fuels worldwide, depletion of fossil-fuel supplies and the political instability in the Middle East, it is highly unlikely that oil prices will decline at all," Hoffman added.
Oil prices advanced on Tuesday above 75 dollars supported by violence in the Middle East, a big oil pipeline leakage in Nigeria, and concerns over refinery shut-downs in the United States, dealers said.
Free State provincial premier Beatrice Marshoff praised the initiative saying it came at a time when the agricultural economy was deteriorating "as well as the drastic decline of the mining industry in the Free State."
"Not only will the industry lessen the country's dependence on fossil fuels, but it will alter the rural economic scene in the Free State with regards to job creation and retention, agricultural development and industrial development," she added.
Between 35 and 40 percent of the town's 120,000 residents are unemployed and the local government is hopeful that the estimated 10,000 jobs the project will re-create some prosperity in the dusty rural "dorp" (village).
"We are confident that the bio-ethanol industry will stabilise the agricultural economy, by among others, lessening the maize surplus, creating a viable yellow maize market and expanding maize production areas in the country," Marshoff said.
Hoffmann added that "bio-ethanol will create 100 times more jobs than the crude oil refineries, and most important is that these jobs are created in rural areas " -- a vital consideration in South Africa where uneployment and poverty are rife.
AFP 25 1331 GMT 07 06
Copyright ©2006 AFP. All Rights Reserved.
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