Japanese Cars and Soda Drinks Show Future for Abengoa’s Biofuels

Jun 10, 2014 11:43 am ET

June 10 (Bloomberg) -- Abengoa SA, the Spanish renewable energy company investing in biofuels, is in talks with Japanese car manufacturers and soft-drink makers to help them develop products ranging from bottles to chemicals.

“All types of companies -- automotive, consumers -- are asking us to collaborate to develop joint projects” Javier Garoz, chief executive officer of Abengoa’s biofuels unit, said in a phone interview.

The comments indicate potential customers for the output of a plant in Kansas, where the Seville, Spain-based company expects to start commercial production in August or September after spending about $600 million building it.

Abengoa already is producing biofuels from food crops such as corn at 14 plants and is seeking to expand output of so- called second-generation fuels grown from cellulose material. The facility in Kansas will produce ethanol from a mix of agricultural waste, wood and non-food crops.

“Second generation has been the object of all our investments for innovation in the past 10 years,” Goetz said.

In the first quarter, Abengoa’s biofuels business generated 39 million euros ($53 million), up from 8 million euros a year earlier. After the Kansas plant is finished, the company doesn’t have plans for new major projects in biofuels. It will seek growth by forming ventures with partners who could provide the financing, Goetz said.

In this sense, Abengoa has also been discussing with private equity funds about possible ventures as well as with large oil companies, he said. Goetz didn’t name any of the companies.

For future expansion, new markets are opening in parts of Africa, such as South Africa and Mozambique, and in Asia, “specifically in Korea,” Goetz said.

Among the more established markets, Brazil is the most interesting, followed by the U.S., Goetz said. Europe is further behind and needs to create an improved energy regulatory framework, he said.