After 88 years as the leading turnkey sugar- and ethanol-plant supplier in Brazil, Dedini Industrias de Base S.A. has turned to biodiesel-and now, in another step beyond its familiar turf, is working on its first foreign contract to supply a biodiesel plant to neighboring Colombia.

Jose Luiz Oliverio, Dedini's vice president for technology and operations, says the Colombian plant is relatively small. When it opens in 2010, its expected output will be just 100,000 metric tons (30 MMgy) of palm-based biodiesel annually or 2,000 barrels a day.

Most of the output is likely to go to the Colombian market, but some may be exported to the United States and Europe. The plant will be constructed in the refinery city of Barrancabaermeja, Colombia, for Ecodiesel Colombia S.A. Ecodiesel's parent company, Ecopetrol S.A., will supply the feedstock. The venture is part of a program by the Colombian government to improve the quality of diesel in the country.

Dedini has already outfitted four biodiesel plants in Brazil-100,000 metric-ton-per-year plants (30 MMgy) for beef producer Bertin, soybean crusher Granol and oilseed crusher Caramuru; and Dedini's 50,000 metric-ton-per-year (15 MMgy) joint venture with Joao Nicolau Petorni, the owner of the Barralcool sugar and ethanol mill. Dedini is also under contract to supply three biodiesel plants for a total output capacity of 121 MMgy to Brazilian agricultural conglomerate Agrenco and another 60 MMgy plant for Brazilian biofuels startup Bionasa.

In the case of the Ecodiesel plant in Colombia, Dedini teamed up with Italian biodiesel-plant equipment supplier DeSmet Ballestra, which will be responsible for the pretreatment of the vegetable oils and for equipment of the biodiesel plant.

Dedini's move into biodiesel is significant, considering that it and the Brazilian ethanol industry grew up together. Dedini was founded by Mario Dedini and Pedro Ometto. Ometto's family controls Brazil's largest sugar and ethanol producer Cosan.

Dedini, based in Piracicaba in Brazil's southeastern state of Sao Paulo, has a relationship extending to all of Brazil's 300-odd sugar and ethanol plants. Its segue into biodiesel was in part based on the synergies of integrating a biodiesel plant with an existing ethanol mill. "I think that is the biggest advantage that our biodiesel system offers," Dedini's Oliverio says.

Lower Costs
Well before Brazil's government made biodiesel blends mandatory this year, Dedini introduced the model of an integrated ethanol-biodiesel system and launched its first integrated ethanol-biodiesel prototype at the Barralcool plant in 2006 in Brazil's main soybean-producing state of Mato Grosso. The cane bagasse-fired cogeneration plant of the sugar and ethanol mill provides all the energy for the integrated mill operations, while the biodiesel output fuels the farm machinery such as the cane harvesters. The workforce serves both plants. The efficiency of the arrangement holds promise for carbon credits, but the company has not fully explored the prospects.

The model of building a biodiesel plant onto an existing cane mill reduces required investments and costs while making maximum use of acreage around the plant.

It starts with the regular opportunity to plant oilseed crops in sugarcane fields. Cane is a grass that grows back every season after cutting. To help improve yield, producers replant
cane on 15 percent to 30 percent of the land around a mill every three to five years. The rest of the land is available between sugar harvests for a single rotation of soybeans, peanuts or sunflowers.

In the case of the Colombia biodiesel plant, the facility is a standalone operation, but the international expansion accentuates Dedini's growing skill at both biofuels.

Tailspin
Brazil launched its biodiesel program 30 years after implementing its Pro-Ethanol Program in the 1970s to reduce its dependence on foreign oil. At the time, Latin America's agricultural giant was one of the world's largest petroleum importers, bringing in nearly 90 percent of its domestic needs from abroad. The oil crisis at the time sent the economy into a tailspin and the military dictatorship, in addition to stepping up domestic oil exploration and production, bet that sugarcane producers could make their own automobile fuel in Brazil if the government would guarantee them a captive market.

Going the way of ethanol worked for Brazil. The nation of 192 million people has one of the most advanced biofuels programs in the world with more than 30,000 filling stations offering pure hydrous ethanol as well as gasoline with a mandatory blend of E20 to E25.

Brazil now is encouraging biodiesel as well. The government made mandatory a 2 percent biodiesel blend in all commercially sold diesels on Jan. 1. In March, it decided to accelerate the program with plans to have B5 in place by 2013-though recent discussions have raised the possibility of a B5 blend as early as 2010. In any case, on July 1, Brazil will raise its mandatory blend to B3. The decision was made in order to soak up some of the slack capacity in the biodiesel industry, which officials believe inhibited investment that would get Brazil closer to B5.

In the first half of 2008, Brazil's National Petroleum Agency (ANP) reports purchasing 480 million liters (127 million gallons) of biodiesel to supply the market at B2 for the first half of 2008. With the B3 mandate, demand for biodiesel should jump by 50 percent in the second half of 2008. The government's political commitment to developing Brazil's biodiesel market bodes well for Dedini as an equipment supplier in the sector.

80-Percent Penetration
Ethanol remains Dedini's bread-and-butter business. Among Brazil's cane-sugar and ethanol mills, existing and under construction, Dedini mills account for 80 percent of the national production of ethanol-roughly 25 percent of global ethanol production. The company is supplying sugar and ethanol plants to other countries in Latin America such as Jamaica and Venezuela as well as to Africa. Yet the company's penetration into Brazil's biodiesel output capacity now is the same as its ethanol involvement, around 80 percent of national production.

Where ethanol flourishes, biodiesel can follow suit, particularly where plants are located together. The reason is the sugarcane biomass, known as bagasse, left behind by the harvest.

Brazil's cane industry has been driven since its inception during the colonial period by world demand for sugar, but the impetus behind Brazilian cane expansion has changed just in the past few years, says Plinio Nastari, president of Datagro. The firm, based in Alphaville near the city of Sao Paulo, analyzes sugar and ethanol. "Ethanol will now be the force behind Brazil's cane crop expansion, in large part due to the success of the flex-fuel motor," Nastari says.

Traditionally, Brazil has diverted about half of the sucrose that it crushes from its cane crop to sugar production and the other half to ethanol, but over the next decade or so this will shift toward about 60 percent going to ethanol. Nearly all of Brazil's sugar and ethanol mills, and now its biodiesel plants as well, use leftover cane, or bagasse, to fire cogeneration of thermal electric power plants that provide heat for refining and distillation and electric energy for operations.

The rapid expansion in cane has sent bagasse prices through the floor. Mills are accumulating large stockpiles of the biomass-which Dedini next wants to tap as a feedstock for cellulosic ethanol production.

Rapid Hydrolysis
Dedini has been working on a rapid hydrolysis cellulosic technique over the past decade in which it has invested more than 12 million reals (R$12 million or U.S. $7 million) in partnership with Brazil's massive sugar and ethanol cooperative Copersucar. The company secured a $R50 million (U.S. $29 million) grant in 2007 from the Foundation for the Expansion of Scientific Research in Sao Paulo (Fapesp) to develop cellulosic technologies.

Dedini will match that sum with its own investments to develop new cellulosic techniques in hydrolysis. "The rise of world interest in biofuels has intensified the search for technological advances based on scientific research," says Carlos Henrique de Brito Cruz, Fapesp's scientific director.

Dedini has constructed a prototype cellulosic ethanol plant called the DHR project-Dedini Rapid Hydrolysis-in its Sao Luiz mill, in Pirassununga in Sao Paulo state. The Center for Cane Technology in Piracicaba, Brazil, a research spin-off of Copersucar, was also instrumental in early hydrolysis testing before the installation of the DHR at the Sao Luiz plant.

The experimental plant has a 5,000-liter (1,320-gallon) daily capacity. "Ethanol production from this technique will be able to compete with gasoline as long as oil is above $40 a barrel," Dedini's Oliverio says.

He acknowledges that the prototype plant has encountered obstacles-it needs improved filters to remove sand, for example. "We haven't been able to run the plant continuously because of the corrosiveness of the sand that gets into the system," Oliverio says. "We are shutting down weekly." Yet Oliverio doesn't think sand removal will be a difficult obstacle to overcome.

Still Innovating
In other words, after nine decades, Dedini is still trying to innovate. Aside from the idea of placing biodiesel and ethanol plants together, it's working on ethanol innovation as well. The DHR plant's core process uses a diluted acid wash to break down the lignin that holds the C5 and C6 sugar molecules in the bagasse. So far, there is only a fermentation method for the C6 sugar. The C5 molecule would add about 25 percent more sugar and ethanol production to the hydrolysis system.

According to tests of the prototype plant, conventional ethanol production at a mill could double from 6,000 liters per hectare (641 gallons per acre) of cane by simply using the bagasse to make cellulosic ethanol in addition to the ethanol made from the sucrose that comes from crushing the cane stalk.

Questions remain regarding allocation of biomass. Most of the bagasse created in sugar and ethanol production now goes to thermoelectric cogeneration in ethanol and biodiesel plants. And a third of the biomass from the cane plant is also left in the field.

Dedini's choice of a mild acid wash to break up lignin bucks a trend. Most scientists and researchers believe that the future of cellulosic ethanol production will be enzymes, but cheap mass production of required enzymes is difficult. Brazil will likely need hundreds of millions of tons of enzymes to break up the lignin in its annual 500 million-ton cane crop.

"This type of acid method typically inhibits fermentation of the sugars in the bagasse, so mills will have to figure out how to overcome this," says researcher Carlos Rossel of the Unicamp university.

For the time being, Dedini's blend-a dilute acid that doesn't impair fermentation-is as promising as enzymes to become commercially viable in cellulosic ethanol production.
In short, Dedini-a historic presence in Brazilian biofuels-is still very much in the game.

Elizabeth Ewing is a journalist covering biofuels from Sao Paulo, Brazil.