Latin Finance - July/August 2011 - 40

peru agriculture

order to supply Lima,” Llosa adds. The company expects to resume exports once it reaches full capacity at the end of 2012. Free-trade agreements Peru has signed with several Asian countries, the European Union (EU) and the US, create multiple options for exports. But Llosa says the EU offers the best conditions due to new rules that will require member states to lower carbon emissions.

a higher price than ethanol made from other sources, such as corn. In the case of Peru’s northern coast, both Maple and Agricola del Chira are also planting on barren land, which means they are not clearing any vegetation that would have a negative impact on carbon emissions. All this helps bring in a higher price for the product.

Green Export

Maple Energy, which owns 13,500 hectares of land in Piura, also plans to export to Europe. It will have 7,800 hectares planted by the second half of 2012 and has the capacity to produce 35 million gallons of fuel-grade ethanol. “We sit just 25 kilometers from a deep water port (Paita) where we can ship to Japan, EU or the US. Our principal market, however, will be Europe with exports likely entering Rotterdam,” says Rex Canon, President and CEO of Maple Energy Canon. Maple has a contract with Penta Tanks Terminals, a subsidiary of Peru’s Andino Investment Holding, which will build and operate ethanol storage tanks and a submarine pipeline to upload ethanol to tankers for export. Maple’s ethanol project requires $254 million in investment from private and multilateral sources. Of that amount, $105.5 million came from equity investments, including $28 million raised through the public markets in June 2010 and $12.5 million in preferred equity from a local infrastructure investment fund managed by Peru’s AC Capital Partners. Maple provided the remaining equity. Meanwhile, $148.5 million took the form of long-term, senior secured debt financing raised in 2010 from the Andean Development Corporation ($65 million), Dutch development bank FMO ($33.5 million), Inter-American Development Bank ($25 million) and Peru’s Interbank ($25 million). Canon says the decision to export to the EU rather than other markets results from Maple producing “a very efficient ethanol in terms of greenhouse gas reduction.” Sugarcane-based ethanol receives

Europe will be Maple’s primary market, Canon The company is finishing the process for certification through Germany’s Roundtable for Sustainable Biofuels (RSB), which develops and maintains global standards for biofuel production. Maple’s ethanol project is a pilot project for RSB and certification from the organization, which is expected in the third quarter of 2011, will allow it to eventually export to the EU under favorable carbon- reduction standards.

Cleaner diesel

Aside from ethanol, companies are looking to produce other types of biofuels on Peru’s coast. For instance, Peru’s Heaven Petroleum Operators (HPO) is developing 50,000 hectares in the southern Ica department to grow jathopha, also known as physic nut. Jatropha is considered one of the top alternatives for biofuels due to the high oil content of its seeds and minimal water requirements. HPO recently concluded a deal

with the Peruvian government to buy approximately 15,000 hectares of arid land in Ica. The company plans to install the first 100 hectares of seed beds by the end of 2011, with the help of an Israeli firm. Initial production will be used to satisfy local demand, which is growing due to regulatory changes. Since January 2011, diesel sold in Peru must contain a 5% blend of biodiesel. The country’s refineries currently import biodiesel from Argentina and Asia. Imports from the US, once the top supplier, were stopped after the government’s competition agency, Indecopi, ordered that a $150-ton anti-dumping premium be applied to US imports. “The initial beneficiaries of production will be the local refineries, but we expect to be capable of exporting excess volume within two or three years after the start of production,” says Alberto Siles, HPO commercial manager. Siles says the project will require an investment of between $180-$200 million, depending on whether the company decides to build its own desalinization plant or hire an outside construction company. Ica, the star of Peru’s agroexport industry, is facing a serious water crisis as a result of agricultural expansion. Projects like that planned by HPO will be required to find alternative water sources. Financing for the project is still in the works, but Siles says HPO is in the final stage of going public. “We have completed the paperwork to list on the stock market (Lima Stock Exchange). This should be finalized in the third quarter of 2011. We are looking at an IPO of around $20 million,” he says. Peru’s government is looking to stimulate investment in other biofuel projects in the jungle (sugarcane for ethanol) and highlands (rapeseed for biodiesel), according to Julia Justo, who runs the state’s National Environment Fund (FONAM). The other major possibility is biodiesel made from palm oil. Besides Agricola del Chira, the Romero Group also has palm oil plantations in the northern jungle, where it produces palm oil for human consumption, but could move into biodiesel as crops spread. LF

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July/August 2011

Latin Finance - July/August 2011

Table of Contents for the Digital Edition of Latin Finance - July/August 2011