Frost: Enhanced Biofuel Production R&D Attracts Investors to Latin America

December 15, 2008 // Published as a news service by IHS

Biofuel feedstock production is already moving into the area, analysts said, with significant amounts of ethanol and soy produced in Brazil and Argentina, respectively.

Recent analysis from Frost & Sullivan of the Latin American biofuel technology providers found that the Argentinean market had an installed capacity of approximately 600.000 tons of feedstock in 2007, with estimates for this to reach 1.2 million in 2008.

Latin America's scientific sophistication in feedstock production makes it an attractive destination to potential investors, analysts said, while existing investors will appreciate greater access to funding due to the global market's high growth expectations.

"If Latin America shows a certain level of economic and political stability, larger numbers of investors will come in search of feedstock," said Julio Campos, industry analyst at Frost & Sullivan. "Investors will, in their wake, bring important improvements in R&D to further develop feedstock."

Although R&D has risen in relevance in the biofuels industry, Latin America still lags behind. Analysts said scientists in the region will have to devise ways to produce new feedstock, lower production costs and enhance existing production lines. Latin America needs more economic muscle to perform R&D all on its own and will be looking to emphasize its strategic advantages to entice foreign investors.

So far, R&D in Latin America has concentrated on improving existing chains and oil-to-biofuel systems and technology. However, Latin America has been working hard on refining its existing harvesting and transportation techniques and technologies to increase its feedstock yield and biofuel production, analysts said.

Latin America is fast becoming one of the world's main biofuel feedstock producers. As a result, analysts said the region should upgrade its R&D to keep pace with feedstock production.

"Companies are coming to Latin America to settle processing plants near the feedstock," said Campos. "Latin America will also be cashing in on the global lack of feedstock for biofuel processing, since it already has the required arable land."

Source: Frost & Sullivan.