Source: mongabay.com
Vale, a Brazilian mining giant, will buy palm oil producer Biopalma da Amazonia SA Reflorestamento Industria & Comercio, reports Bloomberg.
The deal, valued at $173.5 million, will enable the mining company to run more of its operations on palm oil biodiesel.
Vale began its palm oil push in 2009 when it formed a partnership with Biopalma. At the time Vale said the deal would save $150 million in fuel costs starting in 2014, with palm oil biodiesel replacing up to 20 percent of diesel consumption in the company's northern operations.
Biopalma has six oil palm plantations covering 18,400 hectares (45,467 acres) in Para, according to Vale. The company expects this to expand to 60,000 ha in 2013.
The announcement comes less than a year after Brazil laid out plans to dramatically expand palm oil production in the Amazon. The initiative, called the Program for Sustainable Production of Palm Oil (O Programa de Produção Sustentável de Óleo de Palma), will provide $60 million to promote cultivation of oil palm in abandoned and degraded agricultural areas, including long-ago deforested lands used for sugar cane and pasture. Brazilian officials claim up to 50 million hectares of such land exist in the country, but Brazil says it will strictly limit development to less than 5 million hectares. The program specifically prohibits expansion at the expense of native forests, a major concern among environmental groups that have watched the relentless conversion of tropical forests across Malaysia and Indonesia for oil palm over the past 25 years.Another industrial giant has also recently invested in the domestic palm oil sector. Last year Petrobras, Brazil's state-run oil company, said it would invest $315 million in the construction of a palm oil biodiesel facility in the state of Pará. The project would have the capacity to produce 120 million liters (32 m gallons) of biodiesel per year, much of which would be exported to Europe via Portugal. Petrobras said it will acquire 1.1 million palm seedlings for the project and that harvesting would begin in 2014.
Brazil currently produces about 110,000 metric tons of crude palm oil per year, a fraction of the amount produced by market leaders Indonesia (16.9 million metric tons in 2008) and Malaysia (15.8 m tons).