Angola’s $750 Million Sugar-to-Fuel Project to Start in June

Luanda, Angola — A $750 million project to produce ethanol and sugar in Angola will start next month after a year of delays as costs rose 50 percent on a plantation larger than Montreal.

 

Cia de Bioenergia de Angola Lda, which is known as Biocom and has Brazilian construction company Odebrecht SA among its owners, plans to produce 36,000 metric tons of sugar this year starting in June, Managing Director Carlos Henrique Mathias said Monday in an interview in Luanda, the capital. It’s targeting 6,000 cubic meters of ethanol production in 2015, he said.

“Sugar and ethanol production were supposed to start last year,” Mathias said. “We had to delay a bit to focus on testing first.”

Angola, Africa’s second-largest crude oil producer after Nigeria, wants to diversify its economy away from oil, which accounts for about 95 percent of exports. The nation of 24 million people imports 225,000 tons of sugar annually, according to the U.S. Department of Agriculture. The country, which consumes 400,000 tons of the sweetener each year, wants to become self-sufficient, Mathias said.

The southwest African nation is rebuilding agriculture to reduce imports as foreign-currency reserves decline with oil revenue, after prices of the fuel fell about 40 percent since June.

The Biocom project, 320 kilometers (200 miles) east of Luanda, was originally budgeted at $500 million and targeted 40,000 tons of sugar for last year and 260,000 metric tons a year by 2018, Mathias said in a 2013 interview.

Double Output

The 42,000-hectare (103,784-acre) farm, Angola’s largest, plans to expand to 80,000 hectares of sugar cane as part of its second phase in four years and increase output to 254,000 tons a year by 2021, Mathias said. Production will then double by 2025 depending in part on sugar prices, which have fallen 28 percent in the past 12 months.

Biocom is 40 percent owned by Odebrecht and 40 percent by Angolan company Cochan SA, which is controlled by General Leopoldino Fragoso do Nascimento, an adviser to President Jose Eduardo dos Santos known as Dino. State-run oil company Sonangol EP holds 20 percent.

Mathias rejected claims in a Brazilian court that Biocom committed human-rights abuses or that the 2013 sale of 40 percent of the company by Vice President Manuel Vicente to Dino violated transparency laws.

“The sale process was totally transparent,” Mathias said. The court case in Sao Paulo is based on the false claim that Biocom confiscated workers’ passports during a work visas process, Mathias said. “We’ll prove that this is based on bad faith of the people that are suing us,” he said.

Copyright 2015 Bloomberg

Lead image: Angola map. Credit: Shutterstock.

 

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