Fund manager Principle Capital has raised $70 million towards a $290 million Mozambique bioethanol plant expected to come onstream in 2011, CEO Brian Myerson said on December 11.
Principle, listed on London's AIM, raised the money from a group of hedge funds to start a sugar cane plantation of more than 20,000 hectares in the central region of Mozambique that will provide feedstock for the plant.
"It will be in the top five bioethanol plants in the world in terms of production," Myerson said. The facility will have a capacity of 2.5 million gallons of bioethanol a year. "We're rolling out the programme over the next 4-5 years. Sugar cane is the best feedstock to produce ethanol because of the very efficient energy conversion, which also makes it the most environmentally friendly."
London-based Principle, which has invested $5 million of its own money in the project, aims to raise a further $90 million in the next phase of financing in 2008, possibly combined with a flotation of the business. The remaining $130 million is expected to be raised as loans from banks, Myerson said. "A number of banks have expressed an interest," he said.
The plant, to be built near Dombe town, about 200 km west of Beira port, will serve biofuels markets in Europe and North America and will be exempt from tariffs under European and U.S. trade agreements, he said. It will truck bioethanol to Beira and ship the fuel to its markets in bulk tankers. Myerson said the investment would create 2,500-4,000 jobs.
The project has already received approval at provincial level, and an application for the final go-ahead from the central government is expected to receive the green light before the end of January, Myerson said.
Feasibility modelling was completed and independently verified by industry experts in July 2007. Cane yields are expected to be over 50 percent higher than the Brazilian average, due to quality of soils, climate and irrigation, Principle has said. Brazil is the world leader in efficient ethanol production from sugarcane.
Mozambique has recently agreed other biofuels investments.
In October, Mozambique signed a $150 million deal with London-listed Central African Mining & Exploration Company Plc (CAMEC) to build a plant to produce 120 million litres of ethanol a year by 2010.
In August, state-owned Mozambican Petroleum Co. (PETROMOC) unveiled a $550 million biofuels project aimed at easing an energy crunch in the fast-growing southern African nation.
