Pure Biofuels secures financing for Peruvian biodiesel plant

By Anduin Kirkbride McElroy | November 01, 2007
Pure Biofuels Corp. announced in September the closing of a $30 million round of private financing intended to complete the construction of a "52.5 MMgy biodiesel production facility" at the Port of Callao in Lima, Peru.

The financing consisted of "a $10 million convertible note and a $20 million secured credit facility," according to the company. Pure Biofuels CEO Luis Goyzueta later confirmed the funding came from a large East Coast private equity fund. The company will also use the financing to complete the expansion of InterPacific Oil, an existing biodiesel plant in Peru that Pure Biofuels acquired in May. The expansion from 7 MMgy to 10 MMgy is expected to be complete by the end of November.

Construction of the Callao Port refinery commenced in June and is expected to be complete in the first quarter of 2008. Once completed, the facility will test its process lines for a month, followed by a three-month ramp-up to full production. The continuous-flow process was designed by Argentina-based Capricorn Chemical Engineering. The facility is near the La Pampilla Refinery, Peru's largest oil refinery.

The combined capacity of 62 MMgy will make Pure Biofuels one of the largest biodiesel producers in South America, according to the company. In addition to its expansion underway in Peru, Goyzueta said the company has plans for additional expansion into Argentina and other South American markets.

The biodiesel plants will use crude palm oil for feedstock-at least initially. The company has secured 60,000 hectares (148,263 acres) in central Peru for the development of palm plantations. Jatropha and canola are also being considered. "Once fully planted and producing, the 60,000 hectares will be able to supply 300,000 metric tons of crude palm oil per year, roughly two times our requirements," Goyzueta said. "We're very confident in our plans to provide 100 percent of our own feedstock. We think other producers will realize the security that this structure provides a company like ours, and we expect to see others following our lead."

The plantation was previously an illegally harvested rainforest that is now considered degraded land, according to Goyzueta. "The local government is very excited about our plans for developing a plantation there, along with the extracting facility to turn the feedstock into oil," he said. "We'll be employing thousands of workers. We're fortunate to be near proper infrastructure that will allow us to transport our oil cost-effectively to Callao, where we'll have a blending facility process the finished product before selling it to licensed distributors."

Pure Biofuels is based in both Los Angeles and Lima. It was founded in 2006 for the purpose of investing in the Latin American renewable fuels industry. Peru is one of several countries considering a biofuels mandate. "Most of Latin America is energy dependent," Goyzueta said. "That, combined with the region's huge agricultural potential, makes Latin America a natural area of focus for our company's growth."
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