Dec. 28 (Bloomberg) -- Noble Group Ltd., the Hong Kong-based company responsible for a 10th of Brazil's ethanol exports, said it will spend $450 million to boost sugar-cane processing fivefold in the South American country by 2011.

Noble will increase crushing capacity at its sugar and ethanol mill in Votuporanga, Brazil, to 5 million metric tons of cane from 2 million now, Chief Operating Officer Ricardo Leiman said. Noble will start building a plant in Sao Paulo next year to process an additional 5 million tons a year by 2011, he said.

Brazil's growing fleet of so-called flex-fuel cars is fueling domestic demand for cane-based ethanol, prompting Noble to boost production in the country. About 80 percent of Noble's output will go to supplying the vehicles, which can run just on the ethanol, gasoline or any blend of the two, Leiman said.

``The domestic market will continue to be the driver of demand,'' Leiman said in a Bloomberg Television interview in Sao Paulo.

Brazilian mills produced a record 20.9 billion liters (5.5 billion gallons) of ethanol from the April-November harvest, up from 17.5 billion liters last year.

Mills processed a record 549.9 million tons of sugar cane, up from 474.8 million harvested a year earlier. They process the cane within two days after harvesting, before the plant loses its sucrose, the substance sugar and ethanol are made from.

To contact the reporters on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net; Carla Simoes in Sao Paulo at at csimoes@bloomberg.net.

Last Updated: December 28, 2007 07:37 EST