Fund raises $70 mln for Mozambique biofuel plant
Tue 11 Dec 2007, 14:19 GMT
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By David Brough
LONDON (Reuters) - 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 Tuesday.
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 told Reuters in a telephone interview from South
Africa. 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 (125 miles) 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, he 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.
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