Dow and Mitsui have postponed phase two of their joint venture to build a production unit to manufacture biopolymers for packaging from sugar cane-derived ethanol.
Dow told FoodProductionDaily.com that the decision to delay the second phase of the joint venture was driven by an escalation in costs to design, construct and operate the facility, as well as uncertainties around land ownership legislation in Brazil.
Phase two involved building and operating manufacturing plants to transform ethanol into ethylene, and ethylene into biopolymers.
The partnership aimed to use technology to convert ethanol generated from cane sugar into a range of conventional plastics.
A Dow spokeswoman told this publication: "Dow and Mitsui are currently assessing timing options for the second phase of the joint venture. A decision will be made at a later time based on project economics and market conditions. It is premature to speculate on future market conditions and timing at this time."
Phase one go-ahead
The first phase of the project includes the expansion of sugar cane plantations and the building of the first ethanol mill which will create sugar cane-derived ethanol.
The company is currently farming 20,000 hectares of sugar cane, and expects to process its first full sugar cane harvest in 2014.
The joint venture received regulatory backing in late 2011 and operations at the plant in Santa Vitória were due to commence in the second quarter of 2013.
The original deal saw Mitsui and Co gain a 50% stake in Dow’s facility in the Minas Gera region of Brazil.
At the time, Dow hailed the partnership as an “historic next step” and said it demonstrated the company’s “unwavering commitment to invest for growth in high-value, innovation-rich sectors through strategic partnerships”.
The firm added that it would allow them to lessen their reliance on fossil fuel-based products.
The spokeswoman added: “Dow is committed to completing phase one of the project, which will result in further local and regional development, such as the 850 jobs that have already been created.
“Dow also remains focused on delivering innovative polymer solutions made from renewable feedstocks such as sugar cane.
“In the near term, Dow expects it will capture growth in the Americas through its previously announced US Gulf Coast investments, which will take advantage of increasing supplies of US shale gas to manufacture high performance materials for the high-performance packaging, electrical and telecommunications, elastomers and hygiene and medical markets.”