Investor consortium injects $150m into Zambian biofuels project

A consortium of seven investors including China New Energy, a bioenergy technology provider and Finance Bank Zambia have invested $150 million into the development of a biofuels processing plant in Zambia’s Luapula province, that will produce ethanol from cassava, a root plant.

Sunbird Bioenergy Africa, a biofuels manufacturer headquartered in the UK, will construct and operate the project that aims to start producing and selling ethanol from 2017.

Finance Bank has a 50 percent equity stake in the project and is also acting as corporate finance advisor to Sunbird. The consortium has also committed debt capital to the project, but the exact details and split were not disclosed.

The $150 million investment will finance the construction of the processing plant, as well as the agricultural processing of cassava.

Zambia is in the early stages of implementing an ethanol quota policy, known as E10, which outlines plans to blend up to 10 percent of the country’s petrol with ethanol, according to one of Sunbird’s senior management, Richard Bennet.

“We believe there is a significant market opportunity for ethanol in Zambia. However there is no current internal production of ethanol and no blending is taking place. Our proposed plant will produce 120 million litres of ethanol per year, and that will enable the country to achieve its E10 blending target,” he told Agri Investor.

The company is currently awaiting government approval and expects to begin construction in October of this year.

Sunbird is not the only foreign company hoping to produce biofuels in Zambia. According to local reports, up to six ethanol production companies have expressed interest in establishing operations in the country in recent days.

China New Energy, for which Bennet is a director, is a large biorefineries builder in Asia and recently completed a combined sugarcane/cassava project in Thailand; the firm is modeling the Zambian project on its previous experience.

Sunbird Bioenergy currently has biofuel processing projects under development in Nigeria, where it has signed a letter of intent with authorities to develop 10 bioethanol projects within 10 years, and Zimbabwe.