Oct 08, 2013

Making Ethanol from Corn Topic of Discussion in Mato Grosso

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

One of the novel ideas being floated in Mato Grosso to increase domestic corn consumption is to use the excess corn to produce ethanol. It's a novel idea only because Brazil is famous for its more than 400 sugar/ethanol mills that use sugarcane to produce ethanol. The state produced approximately 22 million tons of corn in 2013, but the domestic consumption within the state is only about 3 million tons. The remainder of the corn must be shipped to livestock producers or exporters in southern Brazil at sky-high transportation costs.

There are two proposed ways to use corn to make ethanol in the state. The most feasible method is to use corn to keep the sugar/ethanol mills operating during the months of December, January, and February when sugarcane is not available. During the summer rainy season the sugarcane harvest is suspended and the mills generally shut down for three months. Two mills in Mato Grosso have already been retrofitted to utilize corn during the summer months to keep the mill operating.

The other method would be an ethanol plant that only utilized corn to make the fuel on a year round basis. Both of these options were the center of discussions at the "First Brazilian Forum for the Production of Ethanol from Corn and Sorghum" held last week in Mato Grosso.

According the Mato Grosso Institute of Agricultural Economics (Imea), a flex ethanol plant that could utilize both sugarcane and corn would the most viable option in the state in the short run. Imea estimates that the investment needed to retrofit a sugar mill to use 500 tons of corn per day for a period of 105 days would be approximately R$ 18 million. The investment needed to build an ethanol plant that only used corn at the rate of 500 tons per day for 330 days would be R$ 45 million.

Their studies indicated that a flex plant could operate by paying up to R$ 20 per sack of 60 kilograms of corn or approximately US$ 4.13 per bushel. A corn-only plant could pay up to R$ 18 per sack of corn or approximately US$ 3.70 per bushel.

There are eight operating sugar/ethanol mills in the state and if all eight mills were retrofitted to utilize 500 tons of corn per day for the 105 days during which they would not use sugarcane, the total corn consumption would be 400,000 tons of corn per year. If all eight mills used only corn at the rate of 500 tons per day for 330 days per year, they would consume 1.3 million tons of corn per year. While that is a significant amount of corn, it is only a small fraction of the 22 million tons of corn produced in Mato Grosso last growing season.

A current example of how this could be accomplished is two Usimat ethanol plants in Campos de Julio and Sao Jose do Rio Claro located in west-central Mato Grosso. According to the company president, Alfredo Scholl, the conversion of the first mill in Campos do Julio into a flex mill costs R$ 47 million with 60% of the money spent on the flex part of the mill and 40% spent on facility to produce DDG (dry distillers grain) which is a byproduct used in animal rations.

Their second converted mill will start operating in the coming weeks and it is scheduled to utilize 180,000 tons of corn in 2014 and 280,000 tons of corn in 2015. The conversion cost is estimated at R$ 20 million which the company estimates will be recuperated within three years of operation.