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Global Netherlands-based grain and oilseed trading company, Agrenco Group, plans to invest US$100mn in three new large-scale biodiesel plants in Brazil, with an industrial capacity of producing 380,000 tons of biodiesel per year. To guarantee export volume, Agrenco has already signed long-term contracts with European fuel distributors.

Finacom, Agrenco’s financial and treasury arm which operates from Malta is working on building the financing portfolio for these projects. In recent years, Finacom was instrumental in closing financial deals running into triple-digit millions of US dollars for structured finance in the agribusiness sector with major European financial institutions such as Commerzbank, HSH Nordbank, WestLB, HVB, UFJ Bank and Deutsche Bank.

“Biofuels are not just a trend anymore; they have become reality,” says Antonio Iafelice, Agrenco’s chief executive. “Using animal fat, we will produce fuel with low iodine concentration, or in other words, a high-quality fuel which is in accordance with European and US standards.”

The company is the latest in a growing string of European investors eyeing Brazil’s biodiesel sector with interest, as world oil prices jumped above US$70 per barrel in recent months. The three new Agrenco biodiesel plants scheduled to enter operation in late 2007 will be built in the city of Rondonopolis in Brazil’s number one soy state of Mato Grosso.

Investments in the plants will stem from a partnership formed by the Agrenco Group with two key Brazilian agricultural cooperatives – a Mato Grosso do Sul state farmers’ cooperative, Coagri, as well as C Vale Agroindustrial, which has more than 7,000 members who operate in the four states of Mato Grosso, Mato Grosso do Sul, Parana, and Santa Catarina.

“All biodiesel plants were strategically placed at least 932 miles away from Brazil’s petrol refineries, aiming to reach places where fuel is more expensive,” says Iafelice. “Mato Grosso state is an example. Diesel oil prices are among the most expensive in the country.”

Agrenco estimates that 25% of the biodiesel produced will be used in local agricultural work, another 20% will be consumed by the company itself, and 55% will be exported. Revenues are expected to total about US$200mn from all three plants.

The Mato Grosso plant is set to produce 180,000 tons of biodiesel per year, while the Mato Grosso do Sul and Parana plants will have a 100,000 ton capacity each. Principal feedstocks are expected to be soy and animal fat.

Agrenco, which has been active in Brazil for many years, has this year expanded its Latin American operations to Argentina. The company also owns controlling shares in a grain export terminal, Terlogs, in Brazil’s southern state of Santa Catarinas.

Last month, the company signed a US$42mn logistics deal with Brazil’s largest rail company, America Latina Logistica, to double Agrenco’s soy and grain shipments to 3mn metric tons, in large part via a new terminal in Argentina. In 2005, the company’s revenues hit US$1.08bn, of which US$450mn came from Brazilian trade.

While biodiesel production in Brazil is just in its initial stages, the country has mandated an obligatory 2% biodiesel mix in all its diesel fuel, or roughly 800mn litres, starting January 2008. By 2013, Brazil will push that mix to a mandatory 5%, though government ministers in recent months have talked of moving that date forward to 2010.