Brazilian Biofuel Frontier

Iowa Company to Launch Corn Ethanol Plant in Mato Grasso

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Mato Grosso is quickly becoming a more viable region for corn production, according to Bruce Rastetter, chief executive officer at Summit Group, and co-founder of Hawkeye Renewables. (DTN file photo)

OMAHA (DTN) -- At the turn of the century, just as U.S. corn-based ethanol was starting to hit its stride with investors pouring money into building new plants as fast as they could, North American producers struck up a rivalry with their counterparts in Brazil.

For much of the past decade, the U.S. ethanol industry had the wind at its back from the blenders credit and the Renewable Fuel Standard, sparking debate with the Brazilian industry about which was more sustainable -- producing ethanol using sugarcane or corn. Even California's low-carbon fuel standard gives sugarcane ethanol more of a carbon break when compared to corn ethanol's footprint, essentially excluding corn ethanol from the picture.

Now corn ethanol may have found a new frontier.

Alden, Iowa-based Summit Group announced last month plans to build the first large-scale, $140-million corn-ethanol plant in Mato Grosso, in an area where corn's percentage of planted acres is growing. Bruce Rastetter, chief executive officer at Summit Group, and co-founder of Hawkeye Renewables in 2003, said Mato Grosso is quickly becoming a more viable region for corn production. In addition, he said farmers in the region are looking to add value to their corn crop, and a market for dried distillers grains is growing as more cattle become part of the mix.

Bank of America estimates that annual ethanol sales in Brazil could reach 13.5 billion gallons in 2022. That would be nearly double the 7 billion gallons currently produced by sugarcane ethanol plants in Brazil. The Mato Grosso region has substantial corn production, making corn ethanol the most viable option to complement sugarcane ethanol production to fulfill a 6.5-billion-gallon annual shortfall.

"One of the key elements changed things in the business in the past five to 10 years -- biotechnology gave us the opportunity to double-crop in acres of country around Mato Grosso," Rastetter said. "You have the ability to grow soybeans, corn and cotton without irrigation. Have increasing corn production as a second crop. It is more profitable for farmers to double-crop corn and soybeans. If you think about it, the ethanol industry is at 25% in gas and they want to go to 27%."

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Eric Peterson, president of Summit Group, said right now corn accounts for about 40% of the crop mix in Mato Grasso, but has the potential to expand to 80% through double-cropping. "The logistics are changing in Brazil," he said. "In central Mato Grasso, they have a $3 basis to the ocean-bound ports. They are also shipping in ethanol."

Peterson said there are a few smaller corn-ethanol plants in operation, but nothing remotely approaching the size of the Summit Group plant expected to break ground within the next six months. The plant is predicted to produce about 50 million gallons a year.

Summit Group is partnering with Mato Grosso-based Fiagril, a company trading in grain, biodiesel, crop-production inputs and infrastructure development. Fiagril is directed by founder, Marino Franz, and his brother, Paulo Franz, who attended Iowa State University's college of agriculture and life sciences.

The new plant will employ the latest ethanol technology deployed by ICM, Inc. of Colwich, Kan. ICM designed and engineered about 60% of the 102 corn ethanol plans in North America. The Mato Grosso plant will have the ability to produce two types of DDG -- high-protein and low-fiber, and higher-fiber, lower-protein.

Rastetter said despite all the talk about the need to build more cellulosic-ethanol plants, corn-ethanol technology has advanced far beyond what it was even 10 years ago.

"In terms of additional technology implemented, we spin fiber off at the beginning of the process," he said.

Few if any new corn-ethanol plants have been built in the U.S. in recent years, as blend-wall limitations and higher construction costs have made new plants less viable. "It is very competitive at $2.40 a gallon," Rastetter said. "We think it is extremely attractive with today's corn market."

He said he believes the future of corn ethanol is bright, because ethanol plants continue to become more and more efficient and corn yields grow.

"One of the more interesting aspects of the Brazilian project is the plant will be built within one mile of the largest feed mill," Rastetter said.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow Todd on Twitter @toddneeleyDTN

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Todd Neeley

Todd Neeley
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