Mubadala Capital unit to invest $2.5bn to produce renewable fuel in Brazil

Acelen will produce diesel and sustainable aviation kerosene at its Mataripe Refinery in north-eastern state of Bahia

Khaldoon Khalifa Al Mubarak, managing director and group chief executive of Mubadala Investment Company and Jeronimo Rodrigues, Governor of Bahia, exchange a pact between Bahia and Acelen. Photo: UAE Presidential Court.
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Mubadala Capital's energy company Acelen will invest $2.5 billion in the next 10 years to produce renewable diesel and sustainable aviation kerosene in the north-eastern Brazilian state of Bahia, to help meet increasing global demand for clean fuels.

Acelen — which owns the Mataripe Refinery in Bahia, Brazils second-biggest and one of the oldest in the country — plans to start production in the first quarter of 2026, the company said in a statement on Sunday evening.

"We will produce sustainable fuel on a global scale, inserting Brazil in the development of the international sustainable chain," said Luiz de Mendonca, Acelen’s chief executive. "This will be Acelen’s first project in renewable fuels. So there is room for us to grow globally in this sector."

The company will mainly be focused on selling products to the foreign market initially, where it expects more demand.

"If Brazil moves forward with discussions already under way regarding incentive policies for the production and consumption of renewable fuels in the country, Acelen will be ready to act in the domestic market as well”, Mr de Mendonca added.

The move is part of an initial agreement signed between Acelen and the government of Bahia during the official state visit of Brazilian President Luiz Inacio Lula da Silva to the UAE.

The UAE’s investments in Brazil have risen to $5 billion as the Emirates continues to deepen its trade and economic ties with Latin America’s largest economy, Abdulla bin Touq, Minister of Economy, said on Sunday.

Major UAE companies including DP World, Emirates Airline, First Abu Dhabi Bank, Yahsat and Mubadala Investment Company are among the major investors in Brazil.

The two countries are currently collaborating on strategic sectors including industry, transport, shipping, storage, infrastructure, construction, management of ports, energy, mining, banking and property, Mr bin Touq said.

Brazilian exports to the UAE reached $714.07 million in the first quarter of this year, while its imports from the UAE amounted to almost $357 million, the Arab-Brazilian Chamber of Commerce said in a statement on Monday.

Mubadala Capital, the asset management subsidiary of Abu Dhabi's sovereign investors Mubadala, created Acelen to operate the Mataripe Refinery and its related logistics assets. In 2021, Mubadala bought the refinery and logistics assets, then known as Landulpho Alves Refinery, from Brazil's state oil company Petrobras for $1.65 billion.

Mubadala Capital manages $17 billion of assets, of which $13 billion are managed in third-party capital vehicles. It oversees two funds in Brazil focused on special opportunities, as well as a series of co-investment vehicles, special-purpose vehicles and continuation funds, according to its website.

The latest clean fuel project in Bahia is expected to generate one billion litres per year, inject 85 billion reals ($17.3 billion) into the Brazilian economy, create 90,000 jobs and reduce carbon emissions by up to 80 per cent by replacing fossil fuels, according to Acelen statement.

"Acelen’s energy transition story began at the very start of operations with the refurbishment of the Mataripe Refinery in Bahia and the subsequent reduction of the plant’s environmental impact," Mr de Mendonca said.

"We are now taking a strategic step forward in our mission to play a leading role in energy transition by implementing a unique and transformative project."

During the first stage of the project, Acelen will use soybean oil and other raw materials, in line with Brazil’s agricultural potential, it said.

In the second stage, expected to begin in 2025, the company will use palm oil and macauba oil, a native Brazilian tree oil with high energy potential that has yet to be fully explored on a commercial scale, it said.

Overall, an area of 200,000 hectares will be planted, the equivalent of 280,000 football pitches, with priority given to degraded areas.

The project will capitalise on the existing utilities, tanking and logistics infrastructure at the Mataripe Refinery.

A sustainable hydrogen generation unit will be built for the fuel hydrotreatment unit and construction will begin in January, Acelen said.

Daily processing capacity is expected to reach 20,000 barrels of renewable fuels, the equivalent of one billion litres per year, enough to supply 1.1 million vehicles, Acelen said.

First Emirates flight powered by sustainable aviation fuel

First Emirates flight powered by sustainable aviation fuel

Initially, green diesel and sustainable aviation fuel (SAF) production will target international markets, where these products are already approved for commercialisation and consumption.

The International Air Transport Association estimates that SAF could contribute about 65 per cent of the reduction in emissions needed by the aviation industry to reach its goal of net-zero by 2050.

Achieving the target requires a massive increase in production to meet demand. the largest boost in production is expected in the 2030s as government support becomes global, SAF becomes competitive with fossil kerosene and credible offsets become scarcer, according to the airlines lobby body.

Acelen plans to invest in genetics, productivity improvements and in selecting suitable areas with high-energy value plantations. It will also build an industrial-scale seed germination laboratory and make investments in research, partnering with public and private institutions in Brazil and abroad.

"The project will be sustainable end-to-end, integrating extensive decarbonisation throughout the entire chain, with the use of native high-energy plants and recovery of degraded areas, all the way through capturing CO2 emissions," Acelen said.

Updated: April 17, 2023, 9:31 AM