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.
Oil palm ‘fruit’
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).
(05/07/2010) Brazilian President Lula da Silva on Thursday laid out plans to expand palm oil production in the Amazon while minimizing risk to Earth’s largest rainforest. The plan, 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.
(11/04/2009) Palm oil producers outside of Malaysia and Indonesia pledged to stop developing new plantations on peatlands, circumventing an impasse that developed between palm oil producers and environmental groups meeting this week at the Roundtable on Sustainable Palm Oil in Kuala Lumpur. The factions deadlocked over plans to account for emissions from plantation development, delaying the criteria for a year.
(06/25/2009) Vale, the world’s largest miner of iron ore, has signed a $500 million joint venture with Biopalma da Amazonia to produce 160,000 metric tons of palm oil-based biodiesel per year, reports Reuters. Vale says the deal will 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. The biodiesel will be produced from oil palm plantations in the Amazon state of Pará. The move is likely to stir up criticism from environmentalists that fear palm oil production could soon become a major driver of deforestation in the region.
(03/23/2009) Already a significant driver of tropical forest conversion across southeast Asia, oil palm expansion could emerge as threat to the Amazon rainforest due to a proposed change in Brazil’s forest law, new infrastructure, and the influence of foreign companies in the region, according to researchers writing in the open-access journal Tropical Conservation Science. William F. Laurance, a senior scientist at the Smithsonian Tropical Research Institute (STRI) in Panama City, Panama, and Rhett A. Butler, founder of environmental science web site Mongabay.com, warn that oil palm expansion in the Brazilian Amazon is likely to occur at the expense of natural forest as a result of a proposed revision to the forest code which requires land owners to retain 80 percent forest on lands in the Amazon. The new law would allow up to 30 percent of this reserve to consist of oil palm.
(08/20/2008) Brazil will allow the establishment of oil palm plantations on degraded lands in the Amazon rainforest under a agreement signed between Brazil’s ministers of agriculture and the environment, reports Folha de S. Paulo.
(07/31/2008) Between June 2000 and June 2008, more than 150,000 square kilometers of rainforest were cleared in the Brazilian Amazon. While deforestation rates have slowed since 2004, forest loss is expected to continue for the foreseeable future. This is a look at past, current and potential future drivers of deforestation in the Brazilian Amazon.
(07/09/2008) Malaysia’s Land Development Authority FELDA has announced plans to immediately establish 100,000 hectares (250,000) of oil palm plantations in the Brazilian Amazon. The agency will partner with Braspalma, a local company, to form Felda Global Ventures Brazil Sdn Bhd. FELDA will have a 70 percent stake in the venture. The announcement had been expected. Last month Najib said Malaysia would seek to expand its booming palm oil industry overseas. The country is facing land constraints at home.