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LS9 Planning Brazil’s Biggest Plant to Make Biofuels, Chemicals

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July 8 (Bloomberg) -- LS9 Inc., a closely held U.S. biotechnology company, may build Brazil’s biggest biofuel and specialty chemicals factory as more companies seek to produce new products from sugar cane, the world’s cheapest fuel crop.

The company is planning a facility may be able to produce as much as 200 million gallons (758 million liters) of fuel and chemicals a year, more than two-thirds bigger than Brazil’s largest biofuels plant, South San Francisco, California-based LS9’s Chief Executive Officer Edward Dineen said in an interview.

LS9 plans to take advantage of Brazil’s domestic demand for petrochemicals and its productive sugar cane crops to convert plants into specialty chemicals that may replace products derived from petroleum. At least three other companies are pursuing a similar strategy.

“Brazil is going to be a focal point for us,” Dineen said. “We envisage multiple production units there.”

The company’s plans are not complete and the factory may be smaller, he said. “The ultimate size will depend on feedstock availability and offtake interest,” he said. Another possibility is a factory that will only produce chemicals with annual production capacity of 75 million gallons.

LS9 uses genetically engineered bacteria to produce diesel fuel and specialty chemicals that are used to make such products as detergents and cleaning materials.

Cheapest Fuel Crop

“Cane production costs are really low,” Salim Morsy, an analyst at Bloomberg New Energy Finance, said today. “It’s known as the cheapest fuel crop in the world.”

Brazilian cane is produced on about 7.8 million hectares, or 2.2 percent of the country’s arable land, and can produce as much as 50 percent more ethanol than U.S. corn a hectare, he said.

Brazil’s biggest biofuels plant is owned by Sao Martinho SA and can produce 450 million liters of ethanol a year, according to New Energy Finance.

LS9 operates a small-scale production plant in Florida that may be expanded to 38 million liters a year by 2014, Dineen said

Amyris Inc., an Emeryville, California-based biotechnology company, is also producing fuel and chemicals derived from sugar cane in Brazil.

Brazilian biodiesel makers BSBios Industria e Comercio de Biodiesel Sul Brasil SA and BioVerde Industria e Comercio de Biocombustiveis SA both unveiled plans to tap Brazil’s specialty chemical markets in the past week.

BSBios plans to build a 60,000-ton a year canola and flaxseed-based lubricants factory through a partnership with the state-controlled oil company Petroleo Brasileiro SA, and Bioverde expects to produce from vegetable oils as much as 100 million liters of chemicals a year by 2013.

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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