28 November 2008
Maputo — The company Procana, established to produce ethanol from sugar cane in the southern Mozambican district of Massingir, says it wants to use Mozambican labour, including Mozambican engineers, in constructing this factory.
On Friday, Procana held a meeting with other Mozambican companies to explain its activities. "We want to build this project with Mozambican companies", the Procana chief executive office, Izac Holtzhausen, told reporters.
Holtzhausen is also the Mozambique country director of the London-based CAMEC (Central African Mining and Exploration Company), which is the main investor in Procana. CAMEC set up another company, Bioenergy Africa, which holds 94 per cent of the Procana shares.
The project involves a 30,000 hectare sugar cane plantation feeding a factory that will produce 320 million litres of ethanol a year. Investment for the entire project is estimated at 500 million US dollars.
Holtzhausen said work on building the factory will begin in 2010, and it will be operational in 2012. "We want to begin this factory with Mozambican engineers. We don't want to import labour", he insisted.
To ensure that the skilled labour is available, Procana is promising scholarships for Mozambican engineers to take masters courses in Brazil, and to serve two year apprenticeships with Brazilian ethanol producers.
In its first year of existence, the company has undertaken preparatory work, including setting up a 30 hectare sugar cane nursery. Production will rise gradually, but to start the factory Procana needs to harvest sugar from at least 15,000 hectares.
But is ethanol viable, given the recent dramatic fall in the price of oil? Within the space of four months, the price of a barrel of crude oil has fallen by almost two thirds. On Friday, oil was quoted at 53.91 dollars a barrel on the New York Mercantile Exchange.
With the price of fossil fuels tumbling, it will be difficult for biofuels to compete. Hotzhausen seemed to recognise this, since he said that when ethanol prices are low, Procana will simply switch to producing sugar for the European market.
There have also been questions raised about the amount of water Procana needs. Will water in Massingir be used to irrigate Procana's sugar plantation at the expense of peasant food crops?
But Massingir traditional leaders were present at Friday's meeting and said they were pleased with the social responsibility programmes undertaken by Procana. These local leaders say they have developed a good relationship with the company.
However, this leaves unanswered the question of whether Procana's water demands might compromise agriculture, not in Massingir district, but hundreds of kilometres further downstream, at Chokwe, the heart of Limpopo Valley irrigated agriculture.
Procana's own calculations, available on the Bioenergy Africa website, are that 407 million cubic metres of water a year will be needed to irrigate 24,500 hectares of sugar cane.
Bioenergy Africa claims "To ensure that cane production is not compromised by other potential users, Procana has obtained a guarantee from the Mozambican government to enable it to use up to 750 million cubic metres a year with a water licence being granted once the final design for the extraction of the water has been submitted".
The source for this water would be the Massingir Dam, on the Elephants river, the major tributary of the Limpopo. In theory, the lake behind this dam can hold 2,800 million cubic metres of water. But the dam suffered a major accident in May, and the damage means that it cannot operate at full capacity. The storage capacity of the dam has been compromised, and restoring it will depend on thorough repairs, for which there is so far no timetable.
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