Brasil EcodieselFueling Brazil with Biodiesel Biofuel Supply Chain Summit 2009         Supply Chain Summit 2009         Gh...
Brazilian Experience on Renewable Fuels
Brazilian Experience on Renewable Fuels                                                       Energy Matrix   100%        ...
The Brazilian Biodiesel ProgramIntroduced in 2005, it was based on:                  ,• Energy matrix diversification with...
Biodiesel: Brazilian Market                              Diesel market: potential market size for biodiesel.              ...
Transportation fuels mix                                                                                 Gasoline C       ...
National Biodiesel Program – where do we stand              Biodiesel Law: Mandatory use to leverage production.          ...
The Ethanol Parallel        Government policy and support       Technological Evolution:         Agricultural: the product...
The Brazilian Biodiesel Sector •   The biodiesel program was introduced in 2005 and Brazil has     become, already,  the w...
The Brazilian Biodiesel Sector (cont.)•    The industry has been working with, aproximately, 50% of its      capacity.•   ...
The competitive advantages of Brazil
Technology or Raw Material: Key Success Factor?                                                      100%                1...
Biodiesel Producion by Raw Material ‐ B il Bi di l P d i b R M             i l Brazil           jan/09   feb/09   mar/09  ...
Optimized Mix of Oils in the Long Term…                      SOYA          COTTON          SUNFLOWER     CASTOR          J...
Brazil: Land, Climate, Regular Rainfall, SunAMAZON REGION: No plantationexpansion, avoiding degradation                   ...
Fuel Distribution Bases and Diesel consumption        North ‐ 9%                                         Northeast ‐ 15%  ...
Brasil Ecodiesel SA    Highlights
Brasil Ecodiesel on the map Major biodiesel producer in Brazil and the only one with nationwide presence    Biodiesel Plan...
Investments in agriculture• Initial investment in Castor based on family      ta      est e t Casto based o a y  farming ‐...
Company s Financial Restructuring       Company’s Financial RestructuringDebt (in ths R$)    1T09      2T09     After 2nd ...
Issues to be tackled by  the Biodiesel Industry
Issues to be tackled by the industry• Worlwide involvement of society in the global warming   issue and in the biofuels di...
“Biodiesel is an industry in its infancy”         od ese s a       dust y ts a cy  “The production of oil seed biodiesel o...
Thank you!         Contacts:     Investor Relations  Phone: 55 21 2546-5031 ri@brasilecodiesel.com.br   @www.brasilecodies...
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Biofuel supply chain summit 2009


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  1. 1. Brasil EcodieselFueling Brazil with Biodiesel Biofuel Supply Chain Summit 2009 Supply Chain Summit 2009 Ghent – 09/15/09
  2. 2. Brazilian Experience on Renewable Fuels
  3. 3. Brazilian Experience on Renewable Fuels Energy Matrix 100% 87,1% 90% 80% 70% 60% 54,6% 50% 45,4% 0% 40% 30% 20% 12,9% 10% 0% World (2007) Brazil (2008) Renewable Non renewables RENEWABLE AND CLEAN ENERGY IS ALREADY A REALITY IN BRAZIL RENEWABLE AND CLEAN ENERGY IS ALREADY A REALITY IN BRAZIL Source: Resenha Energética Brasileira – Ministério de Minas e Energia
  4. 4. The Brazilian Biodiesel ProgramIntroduced in 2005, it was based on: ,• Energy matrix diversification with an eco‐friendly,  sustainable and renewable f fuel.• Reduction of mineral oil and diesel imports of mineral oil and diesel imports.• Social development and job creation while incentivating family farming, mainly in the Northeast of the country. y• Better use of available lands.
  5. 5. Biodiesel: Brazilian Market Diesel market: potential market size for biodiesel. Di l k t t ti l k t i f bi di lDiesel is the main Brazilian fuel, 42% of all oil derivative fuels and more than 50% of transport sector fuels. Brazilian Mineral Diesel Market (‘000 m3) 50.000 47,000 *  44,188  46,478  45.000 39,663  39,361  37,971  40,947  40 768 42,206  39 663 39 361 37 971 40 947  40,768  42,206 40.000 2007‐ 2008 36,581  8.3%  35.000 30.000 25.000 20.000 15.000 Imports      10.000 (000 m3) 5.000 Internal Production ‐ (000 m3) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Domestic market extremely significant, allowing for the development and consolidation of the  Domestic market extremely significant allowing for the development and consolidation of the sector.5 Source:  National Agency for Petroleum, Natural Gas and Biofuels – ANP. (*) 2009 Forecast
  6. 6. Transportation fuels mix Gasoline C Gasoline + A h d G li Anhydrous Eth Ethanol l 21,8 + 7,7 = 29,5% Gasoline: 21,80% Diesel:49,20% Anhydrous Ethanol: 7,70% A h d Eth l 7 70% Hydrated Ethanol: 17 20% Hydrated Ethanol: 17,20% Ethanol (total) 7,7%+17,2%=24,9% Diesel (total) B100: 1,30%49,2% + 1,30% = 50,5% Natural Gas: 2,80% Source: MME ‐ Resenha Energética Brasileira – Resultados Preliminares de 2008 (Maio/2009)
  7. 7. National Biodiesel Program – where do we stand Biodiesel Law: Mandatory use to leverage production.  July 2008 – y July 2009 – y 2010 on 2010 on 2005 ‐ 2005 2007 First half 2008 Fi t h lf 2008 June 2009 2010 Authorized Blend of  Mandatory 2%  Mandatory 3%  Mandatory 4%  Mandatory 5%  up to 2% Minimum Blend Minimum Blend Minimum Blend Minimum Blend Expected anticipation of 5% blend, as happened with 3% and 4%...  Brazilian Biodiesel Production (‘000 m3) 2,500 2 500 2,500 Production Increases show  the success  2,000 1,645 of the program p g 1,500 1,168 1,000 402 Current blend percentages are only the  p g y 500  0.7 69 initial stimulus: higher blends and  pure B100 already feasible in  ‐ engines.  2005 2006 2007 2008 2009 2010 Production Production Forecast 7 Source:  National Agency for Petroleum, Natural Gas and Biofuels – ANP. (1) Forecast considers B4 in 2S09 and B5 in 2010.
  8. 8. The Ethanol Parallel  Government policy and support Technological Evolution: Agricultural: the productivity of sugar cane increased from 55t/ha in 1975 to 85t/ha in 2008 Industrial: in the Ethanol production and in the automotive industry World Trend Potential for Brazil to become a leader Domestic alternative with impact in the Trade Balance Domestic alternative with impact in the Trade Balance Brazilian Biodiesel can achieve, in less time, the same stage ethanol took 40 years!  It will happen with immediate investments and resources! ill h i hi di i d !8
  9. 9. The Brazilian Biodiesel Sector • The biodiesel program was introduced in 2005 and Brazil has  become, already,  the world’s 5th largest producer.• In 2010, B5 will be introduced, representing a 25% increase in the  demand.• Extensive available areas, climate, strong and increasing domestic  Extensive available areas climate strong and increasing domestic market favor the growth of the industry.• Besides the traditional feedstock (Soybean, Sunflower, Cotton and   d h d lf d k( b fl d animal fats/grease), there are many viable options of non‐edible  vegetable oil – Castor, Jatropha, Palm, Macaúba, Babaçu, etc.• As the industry matures, Brazil will become more competitive in  the internacional market.
  10. 10. The Brazilian Biodiesel Sector (cont.)• The industry has been working with, aproximately, 50% of its  capacity.• The industry is most likely to face a consolidation process in the  Th i d t i t lik l t f lid ti i th near future.• Verticalization or some sort of control of the feedstock will be  essential for survival. essential for survival• Efficiency in the industrial process and productivity in the  agriculture side will be extremely important when the free market  takes place. p
  11. 11. The competitive advantages of Brazil
  12. 12. Technology or Raw Material: Key Success Factor? 100% 10% 10% Other Inputs and  80% General Expenses 60% Methanol/ Ethanol 80% % 40% Vegetable Oil 20% 0% Biodiesel Cost Structure Bi di l C t St t Technology Well‐Known! Main Input is Vegetable Oil, in volume  and cost. Not an entry barrier. Second main input is methanol. Achieve uniform quality in large scale  production and with different vegetable  So, its a variable cost industry. oils is the challenge! oils is the challenge! Known Technology + Variable Cost Industry =  Access to raw material is the key success factor.12
  13. 13. Biodiesel Producion by Raw Material ‐ B il Bi di l P d i b R M i l Brazil jan/09 feb/09 mar/09 apr/09 may/09 jun/09Soya 71.16% 73.68% 85.37% 76.37% 81.33% 81.10%Animal Fat 24.54% 19.25% 10.94% 19.36% 16.11% 14.03%Cottom 3.25% 4.96% 1.59% 2.04% 0.00% 2.97%Others 1.05% 2.11% 2.1% 2.36% 2.56% 1.90%Total 100% 100% 100% 100% 100% 100%
  14. 14. Optimized Mix of Oils in the Long Term… SOYA COTTON SUNFLOWER CASTOR JATROPHA PALM % of oil  18 ‐ 20  15 ‐ 20  40 ‐ 45 45 ‐ 50 30 ‐ 39 18 ‐ 22 in the seeds in the seeds kg of oil 400 350 700 700 1,500 3,000 per hectareTechnologically Developed Perennial Edible Avoid competition for food lands; Diversify Risks! Higher content of oil per hectare; Optimize land usage! Take advantage of regional potential of crops; Occupy idle areas, with poor soil correction!
  15. 15. Brazil: Land, Climate, Regular Rainfall, SunAMAZON REGION: No plantationexpansion, avoiding degradation NORTHEAST:  Available land, mostly inadequate  for food production; Excellent for alternative crops, such  p, as Castor and Jatropha; Contribution to social development. BRAZIL - Area Million ha Total 851 Suitable for Agriculture 340 Cultivated 72 Pastures 172 Available 96 Source: FGVAgro – 2º Brazil –EU Business Summit, Dec 22, 2008. Keynote Speaker Roberto Rodrigues. CENTER‐WEST, SOUTH and  CENTER WEST SOUTH and SOUTHEAST: Current main  production areas
  16. 16. Fuel Distribution Bases and Diesel consumption North ‐ 9% Northeast ‐ 15% Mid‐west– 11% Southeast ‐ 45% South ‐ 20%
  17. 17. Brasil Ecodiesel SA Highlights
  18. 18. Brasil Ecodiesel on the map Major biodiesel producer in Brazil and the only one with nationwide presence Biodiesel Plants – 580 ths m3 p.y. Biodiesel Plants  580 ths m p.y.  6 operational multi–feedstock Crushing Units 2 operational Multi‐seed– 1,600 tpd 3 Certification Laboratories (CE, TO e RS) 3 Certification Laboratories (CE TO e RS) Farms: 41,500 hectares of own land + 17,000 leased
  19. 19. Investments in agriculture• Initial investment in Castor based on family  ta est e t Casto based o a y farming ‐ disappointing results • Investment in experiments with Jatropha  p p plantation – 5,000 hectares• Most likely the company will have Jatropha as  the main alternative feedstock
  20. 20. Company s Financial Restructuring Company’s Financial RestructuringDebt (in ths R$) 1T09 2T09 After 2nd Capital RaiseShort Term 120,106 92,543 12,877( )(+) Long Term g , 177,991 136,912 , 80,499 ,(=) Total Debt 298,097 229,455 93,376(-) Cash 7,416 2,321 151,66(=) Net Debt 290,681 227,134 -58,284
  21. 21. Issues to be tackled by  the Biodiesel Industry
  22. 22. Issues to be tackled by the industry• Worlwide involvement of society in the global warming  issue and in the biofuels discussion.• The need to lower the cost of biodiesel production. • Definition of the most suitable feedstock for each region. Definition of the most suitable feedstock for each region.• Genetically modified seeds will play a decisive role in  p productivity of the non‐edible feedstock. y• The water footprint and NxO emissions will become  recurrent issues in biofuels discussions.• Artificial comercial/specification barriers, such as the  land use restrictions and the different national  certifications so as to protect local industries, hindering  world supply of biodiesel.
  23. 23. “Biodiesel is an industry in its infancy” od ese s a dust y ts a cy “The production of oil seed biodiesel occurs in  conjunction with the production of proteins” j ti ith th d ti f t i ” “Mineral oil should be directed to the chemistry y industry, which is a higher value aggregator”“How much does it cost not to produce biodiesel?” How much does it cost not to produce biodiesel? “Biodiesel: no war required”
  24. 24. Thank you! Contacts: Investor Relations Phone: 55 21 2546-5031 ri@brasilecodiesel.com.br @www.brasilecodiesel.com.br
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