Argentinean producer plans expansions in biodiesel, ethanol
(Biofuelsbusiness.com, October 01, 2010)
by Cristina Kroll

One of the leading soy-based biodiesel manufacturers in Argentina plans to double its production by 2011 with a new state-of-the-art facility in the province of Santa Fe. Located in the largest soy oil complex in the world, the company has logistic and cost advantages.

Unitec Bio, which operates under the Corporación América group, has great expectations for its facility in Puerto General San Martin, in the Santa Fe province. It is expected that since Argentina recently increased its compulsory biodiesel mix from 5% to 7% starting in 2011, Unitec Bio could expand its presence in the local market. The company already holds the largest quota of biodiesel for distribution during 2010.

“The company plans to build a new plant in the same location as its first one in order to double its nameplate capacity for 2011, reaching production of 480,000 tonnes of biodiesel a year,” said Fernando Peláez, chief executive officer of Unitec Bio and president of the Argentine Biofuels Chamber (CARBIO). “Unitec Bio is considering entering the ethanol business as well.”

In the long term, the firm plans to have four biofuels manufacturing plants in Argentina.

The company’s second biodiesel facility will be built in the same complex and would have the same nameplate capacity as the one already in operation. The choice to keep enlarging its installations in the same industrial complex is not a random decision. Through strategic associations with its providers, the company has direct access to raw material and port installations without having to manage these issues by itself. The new plant will take an initial investment of $70 million, with construction beginning in December of 2010. The company expects to begin operations a year after that, or at the beginning of 2012.

“From the start, Unitec Bio developed its business with the idea of participating in the local market as well as exporting its products. After two years of existence, one of the company’s biggest accomplishments has been to become the leading Argentine biodiesel supplier for local oil companies,” said Raúl Bernardi, facility manager for Unitec Bio’s plant in Puerto General San Martín’s industrial complex.

The company’s principal clients in Argentina consist of YPF, which buys about 40% of Unitec Bio’s, and Shell and Esso, which each take 25% of the plant’s current production. Petrobras has about 10% of Unitec Bio’s sales.

The firm’s nameplate capacity is 240,000 tonnes of soy-based biodiesel a year, along with between 26,400 to 28,800 tonnes of glycerin 80 per year and approximately 6,000 annual tonnes of lecithin. All of these products satisfy the quality standards from Europe (EN 14214) and the U.S. (ASTM D6751).

“The company is producing only between 200,000 and 220,000 tonnes a year, 800 tonnes a day, of biodiesel to conform to the current demand, although we could increase production if the clients call for it,” Bernardi said.

STRATEGIC LOCATION

Bernardi said the Unitec Bio project began in 2006, when the company carefully analyzed the whole Argentine territory to find the most adequate location for a biodiesel facility. Finally it was decided that Puerto General San Martín presented both logistic and cost advantages, since it is located near the largest soy production complex in the world.

“The plant began operations in 2008. It took a $70 million initial investment, and another $30 million in later investment for working capital,” said Peláez.

“Installing the plant in the Puerto General San Martín industrial complex has been a great differential benefit for Unitec Bio. The concept behind this idea was to be part of an interdependent complex that uses the existing resources with great efficiency, minimizing costs of transport and manipulation, which is essential for large volume industries such as biodiesel,” said Bernardi.

For instance, to reach its current level of production, Unitec Bio processes 3,500 tonnes of soy oil a day. Being in the Puerto General San Martín complex allowed the biodiesel producer to form an alliance with a facility owned by soy oil manufacturers AGD and Bunge.

“Given that soy oil production is a large-scale industry in Argentina, and that a plant such as Unitec Bio’s does not require an amount of raw material that would make having its own soy oil plant essential, we located the facility next to a large soy oil producer, Terminal 6, and it receives this raw material through short-distance plumbing,” Bernardi said.

Getting this amount of soy oil is usually not an issue in Argentina, which is one of the leading producers in the world. Soy oil in Argentina is mostly exported because there is little local demand, with the exception of a few products sold through retail.

In spite of this, Unitec Bio is thinking there will be a paradigm change in regards to the raw material.

“Biodiesel producers in Argentina are used to buying the rural producers’ surplus, but we are evaluating other technologies such as biomass — cellulose and wood residue in particular — or bacteria. In the future, we aim to find raw materials which are independent from the agriculture business,” Bernardi said.

Locating the plant in Puerto General San Martín also facilitated distribution and exportation, being nearby the port installations of the Paraná waterway.

“Having a port of its own it is common for companies which manage large volumes such as Unitec Bio. Without it, a biodiesel company in Argentina would not be viable, since the industry is a net exporter,” Bernardi said. “The facility has the same connectivity and efficiency as plants that have their own ports and soy oil generation, without having to get involved in flour and food production, which is not the core of the company’s business.”

ROAD TO SUSTAINABILITY

The Unitec Bio facility uses technology from Lurgi, a company based in Frankfurt, Germany, Peláez said. “The plant works with short mix alkaline refining technology and manufactures biodiesel through alkaline transesterification. It also possesses a complete system of methanol and water recycling,” Bernardi said. Unitec Bio has a warehouse capacity of 35,000 square meters in order to store its product. The company’s biodiesel process also creates crude glycerin as a byproduct, of which 100% is exported for pharmaceutical glycerin production. The facility produces small amounts of fatty fuels which are used in heat and sustainable boilers.

The company is currently testing new ways to improve the use of these byproducts, Bernardi said. It is examining Glycos Bio technology to produce glycerin-based ethanol and Honeywell technology to create jet fuel through the processing of residual grease.

“The main goal remains the same: to continue making biofuels of larger value through more sustainable sources,” Bernardi said.

MARKETS

Unitec Bio sells about 55% of its production to exports and the remaining 45% to the local market, which was recently opened. Last year, the Argentine Federal Planning Ministry regulated that all diesel in the country be mixed with 5% biodiesel starting in 2010. This opened up an 859,820-tonneper-year market for Argentine biodiesel producers. Nineteen companies were assigned biodiesel quotas for this new emerging market during 2010, including Unitec Bio, which received the largest quota at the time — 113,097 tonnes.

However, last July Argentine President Cristina Fernandez ordered an increase of the mix to 7% biodiesel, with the possibility of reaching 10% by the end of the year. Also, the Federal Planning Manager Julio De Vido estimated that diesel in Argentina would be blended with 20% biodiesel by 2014.

With Argentina’s current nameplate capacity for biodiesel at over 2.5 million tonnes per year, according to the Argentine Renewable Energies Chamber (CADER), the country is more than capable of meeting a 10% mandate, which would require about 1.5 million tonnes per year.

In regards to external markets, Peláez said the company exports biodiesel to Europe, the U.S. and Asia. Unitec Bio is expecting to be a major player in the international scene, as Argentina is now the world’s fifth-largest producer of biodiesel, according to a report from CADER, and has a large surplus of this product after catering its local demand.

Cristina Kroll is a freelance writer based in Buenos Aires, Argentina. She can be reached at cristina.kroll@advancedsl.com.ar.