World's largest iron producer CVRD to use biodiesel in its trains

In what is a major boost to Brazil's biodiesel industry, the president of state-owned company Petrobras Distribuidora (BR), Graça Foster, and the logistics executive director at mining giant Companhia Vale do Rio Doce (CVRD), Eduardo Bartolomeu, have signed a contract [*Portuguese] for the supply of B20, a mixture of 20% biodiesel and 80% common diesel to the mining company.

The fuel will be used in the locomotives that operate on the Carajás Railway and on the Railway connecting Vitória (in Espírito Santo) to Minas Gerais, both in southeastern Brazil.

The contract propels CVRD to the status of one of the biggest consumers of biodiesel in the world. Vale do Rio Doce is the largest logistics service provider in Brazil and the largest producer and exporter of iron ore in the world.

The deal is part of broader fuel supply agreement worth 10 billion reais (€3.8/US$5.1 billion) over 5 years, with Petrobras delivering 1.807 billion liters of biodiesel, diesel, and gasoline per year.

In total Petrobras Distribuidora will open 80 supply points across the country covering the mining, melting and logistical operations of CVRD. The project will create 600 direct jobs.

Currently, CVRD is present in 13 Brazilian states, has business in countries on four continents and offices in New York, Brussels, Johannesburg, Tokyo and Shanghai. The company is the largest private company in Latin America.

Brazil is working to provide incentives to the use of cleaner fuels, like biodiesel, and CVRD's uptake of the biofuel is a major step forward for the industry. Brazil's recently launched Pro-Biodiesel program is aimed at producing sustainable biodiesel, in which small farmers play a role through the Social Fuel policy (earlier post).

Petrobras for its part has made several biofuel innovations, including the development of a new type of biodiesel, called H-Bio which is made from hydrogenating vegetable oils in existing oil refineries:
bioenergy :: biomass :: biofuels :: energy :: sustainability :: mining :: biodiesel :: H-Bio :: Brazil ::

CVRD announced in January a US$6.334 billion investment budget for 2007. According to the mining company, the budget includes the highest amount ever spent in organic growth in the history of the company, as well as investments on Inco, a Canadian mining company acquired by Vale do Rio Doce last year.

Total investments in 2006 were higher, at US$ 26 billion, but that was due to the purchases made by Vale. The company paid US$ 19 billion for Inco, US$ 2.4 billion for Caemi, US$ 47 million for Rio Verde Mineração, and US$ 27.5 million to own all shares of Valesul. Purchases not included, US$ 4.5 million were effectively invested last year, that is, US$ 1.8 million less than the value forecasted for this year.

The company plans on spending US$ 1.698 billion to maintain its existing operations, US$ 4.230 billion in projects, and US$ 406 million in research and development.

The company will invest US$ 1.635 billion in flagship sector, which is iron minerals; US$ 811 million in the aluminum sector; US$ 720 million in logistics services; US$ 2.55 billion in non-iron minerals; US$ 209 million in coal, US$ 101 million in electric energy, US$ 114 million in the steel sector; and US$ 197 million in other sectors.