Mubadala-backed ethanol producer Atvos to build $69m biomethane plant in Brazil

Mubadala Capital acquired a 31.5 per cent stake in Atvos last year

Mubadal Inverstment office. Photo: Mubadala
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Atvos, one of Brazil's largest biofuel producers, has signed an agreement to build a biomethane factory in the state of Mato Grosso do Sul, it said in a statement on Wednesday.

The biomethane plant, which will cost more than $69 million (350 million Brazilian real), will have a 28-million cubic metre capacity per crop and will be Atvos' first based on sugar cane waste.

Atvos, which is backed by Abu Dhabi's Mubadala Capital, said the new facility is being built in Nova Alvorada do Sul, where it already has an ethanol factory.

The new operation will use vinasse and filter cake, waste resulting from the sugar cane production chain, as inputs.

Bruno Serapiao, chief executive of Atvos, said the unit will mark its "entry into the market for natural gas from renewable sources, with the advantage of producing it on a large scale to meet an ever-growing demand".

"At the same time, we expanded our portfolio of sustainable solutions, and, above all, we effectively contributed to the transition of the energy matrix, following a circular economy concept, by disposing of and generating new revenues from waste from our production chain,” he said in a press statement.

The project will enter an engineering analysis phase for final approval, with construction expected to start this year, Atvos said.

Mr Serapiao said the biomethane will help provide an alternative to fossil fuels, especially in regions not served by gas pipelines or in remote areas.

In addition to replacing diesel, he said it can also be used for industrial use, replacing liquefied petroleum gas (LPG) and fuel oil, and even in thermoelectric plants.

“In the case of Usina Santa Luzia, production should be directed to supplying part of the company's and its partners' logistics fleet, aiming to reduce the use of diesel by up to 40 per cent in the medium term," he said.

"The excess volume must be directed to the surrounding municipalities.”

Abiogás, the Brazilian Biogas Association, has projected that biomethane production will jump 600 per cent by 2029.

There are currently 20 production plants in the country, of which only six sell biogas. It's expected that the total number of production units dedicated to commercialisation will reach 90 in the next five years, 42 per cent of which will be via the sugar-energy sector.

Atvos' operation in Nova Alvorada do Sul has the capacity to crush 5.5 million tons of sugar cane and produce 498 million litres of ethanol, which is enough to power nine million compact cars, in addition to cogenerating 376 GWh of clean electrical energy, capable of supplying a population of 1.8 million people.

Mubadala investments

Mubadala Capital, the asset management subsidiary of Mubadala Investment Company, invested $99.6 million in Atvos last year in exchange for a 31.5 per cent stake.

Reuters reported in October that Mubadala Capital raised its stake in Atvos through investment fund FIP MC Green, acquiring the 6.85 per cent owned by Grupo Novonor, formerly known as Odebrecht.

Set up in 2011, Mubadala Capital has grown significantly in scale over the past decade, with offices around the world. It manages $22 billion in aggregate across its own balance sheet investments and third-party capital vehicles across its private equity, solutions, venture capital and Brazil businesses.

In October, Mubadala Capital closed its second investment fund in Brazil after raising more than $710 million.

Brazil Special Opportunities Fund II raised capital from a diverse set of global investors, including a leading public pension fund, family offices, corporates, private equity funds and asset managers across North America, Europe, the Middle East and Asia, Mubadala said in a statement.

Mubadala Capital closed its first fund in Brazil in February 2022 with total commitments of $322 million.

In April last year, Mubadala Capital's energy company Acelen said it would 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.

Acelen – which owns the Mataripe Refinery in Bahia, Brazil's second biggest and one of the oldest in the country – plans to start production in 2026.

Updated: April 11, 2024, 4:21 PM