South Africa’s Illovo Sugar may opt to produce biofuel from sugarcane if it makes commercial sense, its managing director said late on Wednesday.
South Africa’s Department of Energy said earlier this month it would make a pronouncement on regulated bioethanol and biodiesel prices by March next year.
The Biofuels Industrial Strategy targets a 2% biofuels contribution to liquid fuels production by 2013, which translates to 400-million litres a year.
“Our preference would be to wait until (the Department of Energy) makes public its future biofuels strategy, following which we will be able to assess whether any of the proposals contained therein hold any commercial viability for Illovo,” Graham Clark, its managing director, told Reuters in an email.
Canola, sunflower and soya are feedstock for biodiesel, while sugar cane and sugar beet are feedstock for ethanol.
Illovo, a unit of Associated British Foods and Africa’s biggest sugar producer, already uses molasses – a by-product of the sugar manufacturing process – to produce alcohols, which are used in the cane-spirit, pharmaceutical, cosmetic and specialist printing industries.
Clark added, “The level of bioethanol blending into the national fuel pool and the price payable to producers — these will be key factors for any potential cane or biofuels producer.”
The South Africa Sugar Association (SASA) insists that the government’s current exclusion of brownfields projects – sites that are being used for other agricultural purposes – inhibits South Africa’s sugar industry and potential investors.
“New areas suitable for sugarcane cultivation are limited, and the exclusion of current capacity from diversification to ethanol is impacting negatively on the industry’s capacity to contribute,” said Trix Trikam, SASA’s executive director.
SASA represents about 35 000 producers and millers of the sweetener in Africa’s biggest economy
Trikam said it was unlikely sugar producers would switch completely to ethanol production, given that as “a 50-50 mix seems to be global best practice”.
Ross Bruton, an analyst at consultancy Frost and Sullivan, said the restriction on brownfield projects could give way to newer projects.
“(But) there is a risk that without the assistance of large industry players, development of the market would be slow and may be insufficient to meet (biofuel production) targets,” he said.
South Africa’s energy ministry was not immediately available to comment.