Eight months after holding the largest domestic IPO in 2021, Raízen, the country’s fourth largest company by revenues, is once again presenting to the market the reason that led it to seek the good graces of investors. With the support of the funds raised in the market, Raízen and its partner Geo Biogás e Tech will start to build a new biomethane plant made of residues from ethanol production in Piracicaba, São Paulo.
This is the second industrial investment Raízen has unveiled since going public – the first was in a cellulosic ethanol plant in Guariba, São Paulo – and the first investment in biomethane since then.
The Raízen Geo Biogas joint venture plant has already left the engineers’ desks with guaranteed customers. The first is Norwegian company Yara, the world’s largest fertilizer producer, which will use biomethane to produce “green” hydrogen and ammonia, according to a contract signed in September 2021.
The second customer is Volkswagen, which will use the product in its plants in Brazil. Raízen had already announced a partnership with the German automaker in October, which also involved the delivery of electricity and the development of new ethanol formulas, but only recently closed the biomethane delivery contract. With the two clients, the Piracicaba plant’s entire production is already sold.
The unit will consist of two biomethane production “modules” and will have the capacity to produce 26 million cubic meters of the renewable gas per year. Yara will receive 20,000 cubic meters of biomethane per day, while Volkswagen will receive 50,000 cubic meters per day. In both cases, the product is one way the companies have found to reduce the greenhouse gas emissions footprint of their industries.
The stillage that will be used to produce biomethane is already used today as organic fertilizer in the sugarcane fields that serve Raízen’s Costa Pinto mill. The biomethane plant, however, does not change this story. The difference is that, before being distributed to the fields, the biodigestion of the stillage will reduce the amount of residual raw material, but the levels of potassium and nitrates that serve as fertilizer for the sugarcane fields will be preserved.
Raízen’s choice of Piracicaba for this project is symbolic – it is where Cosan started its history in the sugar-and-ethanol industry – but it is mainly of a practical nature. To guarantee delivery of biomethane to customers, it was necessary to build a plant close to the gas distribution network – in this case, Comgás’s network.
With the construction of yet another production unit in the Piracicaba hub, Raízen CEO Ricardo Mussa argues that the site is now a “bioenergy complex,” and no longer just a sugarcane mill. “It has cellulosic ethanol plant, it has cogeneration, it has biogas. It’s like a biorefinery.”
In the plan presented to investors before the IPO, Raízen promised 39 industrial biogas modules by 2030/31 – a deadline that Mr. Mussa promises to meet. The perspective is that the first units will be built near the gas distribution network, either from Comgás or GásBrasiliano.
In those plants more distant from the grid, the plan is to use renewable gas to replace diesel in their own fleets of agricultural machinery. “There is no bottleneck. The future demand for biomethane has low risk.”
There is also the possibility of producing only biogas for electricity generation, offering a third market alternative. In the unit that will be built in Piracicaba, part of the biogas will be used for this purpose, with a capacity of 5 megawatt-hours.
“This production flexibility is interesting. We are delivering what we promised, and with greater profitability than we imagined,” Mr. Mussa said.
The executive also expressed optimism with the plans for new cellulosic ethanol units, although so far only one new plant out of the 26 promised to investors has been announced. According to Mr. Mussa, the qualification of suppliers – an essential step to ensure the protection of industrial patents held by the company – is advancing “with good surprises.” “We are racing to surprise the market,” he said.
Source: Valor International