Latin American countries continue to take ambitious steps to promote production and consumption of biodiesel. Predictably, in South America, Brazil and Argentina continue to dominate with several large-scale projects in queue, and Columbia, among others, is showing potential as a biodiesel producer and exporter. In Central America, Guatemala and Costa Rica and others are also making expansive efforts.
 Brazil&rsquo;s biodiesel market is experiencing healthy growth built around solid public policy, and it is beginning to have positive effects on the Brazilian trade balance. In January 2010, the mandated blend requirement for biodiesel in Brazil was increased from B2 to B5, three years ahead of initial scheduled targets under the national Program for the Production and Use of Biodiesel launched in 2004. This year, the Brazilian Biodiesel Union requested that the government adopt measures to increase the mandated blend requirement to B20 by 2020, and because a tight domestic supply balance for soybean oil is expected, trade sources don&rsquo;t foresee any increases to the current B5 blend requirement until 2013.
 Brazil&rsquo;s soybean processing, refining and bottling capacity continues to grow, with soybean oil consumption estimated at 5.7 million metric tons in 2011-&lsquo;12, according to a USDA Foreign Agricultural Service report published in April, and 2.2 million metric tons of that expected to be used as feedstock for biodiesel production. Rising biodiesel production may hamper Brazil&rsquo;s soybean oil exports this year, however, according to a report published in June by Hamburg, Germany-based Oil World. Brazil, the world&rsquo;s second leading soybean oil exporter, may sell only 1.5 million metric tons of soybean oil for the remainder of the year, according to Oil World, down from 1.56 million metric tons in 2010. It is expected though that within five years, palm oil will cut into the soybean oil capacity used in the food industry and thus free up additional soybean oil for biodiesel production. Soybean oil accounts for 82 percent of biodiesel produced in Brazil, followed by animal fats (14 percent) and cottonseed oil (2 percent), with other oilseed crops such as castor bean and palm oil used in nominal quantities, according to the USDA FAS.
 Brazil is the fifth largest biodiesel producer in the world, coming in just behind Argentina, and houses 69 biodiesel plants with a combined annual installed capacity of more than 5 billion liters (1.32 billion gallons). In 2010, biodiesel production reached 2.4 billion liters under its B5 blend mandate. The USDA FAS report estimates that an additional 150,000 metric tons of soybean oil will be required annually to maintain production levels under its current B5 requirement.
 Investments in new and developing biodiesel projects continue to be made as several big-name agribusiness and pure play biodiesel companies announced plans this year to expand operations in the country. In June, BioVerde Industria e Comercio de Biocombustiveis S.A., which is building Brazil&rsquo;s largest biodiesel plant, expects to sell 40 percent of its output to Europe by 2015. BioVerde is also committed to becoming Brazil&rsquo;s leading specialty chemicals manufacturer from renewable sources. BioVerde plans to retrofit a facility in the state of Sao Paulo that will be able to convert vegetable oils into 100 million liters per year of chemicals for industrial applications.
 In July, state-controlled oil and gas giant Petrobras forged a partnership with in-country producer BSBios Industria e Comercio de Biodiesel Sul Brasil S.A. to evaluate new biodiesel, ethanol and specialty chemical projects. Petrobras acquired a 50 percent stake in BSBios as part of the agreement. According to Petrobras, it plans to spend $3.5 billion through 2014 to boost biofuels ouput. The stake in BSBios &ldquo;consolidates Petrobras&rsquo; leadership in the biofuels sector,&rdquo; according to a company statement. Other notable projects under development in Brazil include a 414,800-liter-per-year biodiesel project located in the state of Mato Grosso developed by Bunge Alimentos SA. In 2010, Archer Daniels Midland Co. announced plans to construct a biodiesel plant adjacent to its existing oilseed operations in Jaocaba, and Brazilian energy company Companhia Paranaense de Energia, or Copel, is developing a very small-scale (about 5,000 liters per year) biodiesel plant in Sao Jorge d&rsquo;Oeste.
 Argentina 
 Like Brazil, Argentina&rsquo;s biodiesel industry has seen explosive growth in recent years with a healthy blend mandate to spur domestic production, feeding excess volumes to export markets&mdash;mainly to Europe.
 Argentina remains the global export leader of biodiesel, surpassing the U.S. last year. Its biodiesel exports are forecast at a record 1.6 billion liters by the end of the year, according to a USDA FAS report released in July, and in 2012, are projected to reach a record 1.75 billion liters as the country could easily supply additional volumes if the demand is stronger, depending on unused capacity and availability of feedstock. An outlook report by the Economic Cooperation and Development and the Food and Agriculture Organization of the United Nations, says Argentina is expected to reach about 2.5 billion liters by 2020.
 Despite its established export regime, there will surely be no shortage of feedstock&mdash;soy oil&mdash;or volumes of biodiesel to fulfill its national B7 mandate, which went into effect late last year. By the end of 2011, Argentina is projected to produce about 2.5 million tons of biodiesel and 3 million tons in 2012, its highest forecast ever, according to Carlos St. James, managing director of Santiago &amp; Sinclair LLC, an advisory firm focusing primarily on Latin American biofuel markets. St. James is also president of Argentine Renewable Energies Chamber (CADER). Much of the uptick in production, St. James explains, can be attributed to fulfilling the B7 mandate and the government potentially increasing the mandate from B7 to B10, possibly by the end of this year or early next. Additionally, a possible B20 mandate could be implemented for the agribusiness sector to use in off-road equipment and vehicles.
 &ldquo;We are now working to increase to a [national] B10 level and are in trials while negotiating with the automotive and oil industries,&rdquo; says St. James, adding that the government has strict oversight on how much volume gets produced under the current B7 mandate and how its data is recorded and published each month.
 Meanwhile, there was a flurry of biodiesel activity this year in Argentina as five biodiesel plants, ranging in annual production capacity from 4,000 to 240,000 tons (1.2 million to 72 million gallons). Currently, the country has 25 formally approved biodiesel plants.
 &ldquo;The larger plants tend to focus on export markets and the smaller ones on the domestic market,&rdquo; St. James says. &ldquo;Investment continues to grow and new biodiesel plants are coming online in the next two years in all sizes, from Cargill with a new 240,000-ton-per-year plant coming online at the end of this year, to a handful of smaller plants that will operate on unrefined cottonseed oil and tallow.&rdquo;
 As far as competition between process technology providers and design/build firms go in Argentina, Lurgi Inc. remains at the top with a commanding 45 percent market share, and a variety of local and U.S.-based process technology providers, such as Westphalia, Desmet Ballestra and Crown Iron Works, all holding another 23 percent, according to St. James. Desmet Ballestra, in particular, has built two major biodiesel plants in Argentina, plus several pretreatment facilities for plants supplied by its competitors, according to Fernando Markous, general manager for the firm&rsquo;s Argentina-based office. &ldquo;We recently signed a contract for a third plant with pretreatment included,&rdquo; Markous says. &ldquo;We also have exported one plant to Peru and two plants to Colombia.&rdquo;
 St. James adds that the investment climate in Argentina for the most part remains healthy, but contends that the gap between the smaller and larger producers needs to close more in order for the smaller producers to have a more competitive advantage. A key driver behind Argentina&rsquo;s surge in biodiesel investment is a differential export tax on biodiesel compared to that of soybean oil, he adds. Soybean oil exports are taxed 32 percent while biodiesel exports are only taxed 16.6 percent, enabling biodiesel producers to benefit from a 2.5 percent rebate. The current net difference between the two is 17.8 percent, which favors large biodiesel producers focused on the export market.
 &ldquo;Investment continues to grow rapidly in Argentina for large plants and small ones,&rdquo; he says, adding that access to working capital continues to be the largest hurdle for a majority of producers, big or small. &ldquo;The government has worked out most of the kinks in the approval process and has established a pricing mechanism that is favorable to smaller producers in the domestic market to help them offset their lack of economies of scale.&rdquo;
 While the majority of Argentine biodiesel exports are destined for Europe, the U.S. and Canada are also on Argentina&rsquo;s radar as possible candidates, particularly with the U.S. biodiesel blenders tax credit set to expire at the end of this year coupled with Canada&rsquo;s biodiesel mandate that went into effect in July. &ldquo;The Argentine biodiesel industry is looking to diversify exports into North America and is in the process of preparing to enter these potentially very lucrative markets,&rdquo; St. James says. &ldquo;Finding the ideal partner will be key to success.&rdquo;
 Other Opportunities
 As Brazil and Argentina dominate in South America, several other Latin American nations, such as Peru, Colombia, Costa Rica, El Savador, Guatemala and Paraguay, are making quieter biodiesel progress.
 Craig Frank, CEO of Miami-based Alternative Fuels Americas Inc., believes Costa Rica, Panama and Colombia are all attractive investment hubs to carry out jatropha cultivation for future biodiesel production. AFA has concentrated its work in Costa Rica where it secured 200 hectares to grow jatropha. Frank says he plans to eventually move to a 5,000-hectare plot, adding that AFA is looking at feedstock development at this point because technology already exists to produce biofuels efficiently.
 &ldquo;Of the projects we know of that are set to come into production, I don&rsquo;t believe the capacity will be greater than several hundred thousand gallons annually,&rdquo; Frank says. &ldquo;We will have, upon launch next year, the largest biodiesel project in Costa Rica.&rdquo;
 In addition to jatropha, AFA is studying the development and potential integration of other feedstocks such as coyol (spiny palm) and algae. Last year, AFA partnered with Sustianable Agro Biotech LLC, a Puerto Rican-based company engaged in algae-to-fuel research.
 &ldquo;We believe SABI has developed interesting ideas and has validated many of them in a lab setting,&rdquo; Frank says. &ldquo;We will, during the coming year, further this research and will, at that time, have a better understanding of what we can fairly and accurately project with regard to a timetable.&rdquo;
 While AFA may have not have produced any biodiesel in 2011, it has set ambitious goals for 2012. The company anticipates producing approximately 1.5 million gallons of biodiesel derived from coyol in Costa Rica.
 &ldquo;We believe production will increase annually with the coyol until we reach a maximum of 3 MMgy [in Costa Rica],&rdquo; Frank explains. &ldquo;Once the jatropha matures, we believe we will produce an additional 4 MMgy for a total of 7 MMgy by around 2015.&rdquo;
 AFA plans to expand its jatropha plantation operations into Panama and Colombia. Guatemala, Dominican Republic and Honduras are also possibilities, according to Frank.
 &ldquo;There are some other countries that are also on our radar, but we&rsquo;ll consider those after we complete our plans in these target countries,&rdquo; Frank says. All in all, AFA has developed a program that intends to reach 80 MMgy of combined biodiesel output from all the countries it operates in.
 While AFA&rsquo;s business strategy may seem aggressive, yet achievable in Costa Rica, surrounding Latin American countries have created, or are in the process of creating, biodiesel blend mandates that should foster development of a biodiesel industry.
 Of all the neighboring Latin American countries, Colombia appears to hold the most potential of becoming a viable biodiesel producer and emerging exporter in years to come. While it may not currently import nor export any biofuels, the country&rsquo;s Ministry of Energy has issued several resolutions to make the blend mandatory at levels that can be supplied by new biodiesel plants coming online. As a result, Colombia is expected to reach a B10 blend by the end of 2012. Author: Bryan Sims Associate Editor, Biodiesel Magazine (701) 738-4974 <a href="mailto:bsims@bbiinternational.com">bsims@bbiinternational.com</a>

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MOVING PRODUCT: The B5 mandate led to production of 2.4 billion liters (634 million gallons) of biodiesel last year in Brazil.

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COMPETITIVE MARKET: While Dedini designed this plant in Brazil, St. James says in Argentina, Lurgi commands 45 percent of the biodiesel design/build market share. 

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A recap of regional biodiesel developments and a look ahead

Solid Growth in Central, South America

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