PERUQS SAMOAFIBER Q EXCITING NEW BIOFUEL

UNCLAS LIMA 004404

SIPDIS

SIPDIS

DEPT FOR WHA/AND, WHA/EPSC, OES/STAS
TREASURY FOR U/S TAYLOR, K. KOZLOFF, J. LEVINE
STATE PASS TO EXIM
DEPT OF ENERGY FOR S. LADISLAW
ENERGY INFORMATION ADMINISTRATION FOR CHARLES ESSER

E.O. 12958: N/A
TAGS: EPET ENRG ECON ETRD PE
SUBJECT: PERUQS SAMOAFIBER Q EXCITING NEW BIOFUEL


1. (U) SUMMARY: A U.S. company is developing a
promising new biofuel source in the Amazon.
The Samoafiber reed is endemic to Peru and
may be the fastest growing plant suitable for
biofuel; the riverine grassQs cellulose is
converted to a crude bio-oil that can then be
converted to ethanol. SamoaFiber Holdings
(SFH) has invested $2 million and seeks more financing.
A few months ago, President Garcia announced GOP support
through land concessions. Samoafiber could fit in well
with USG and GOP strategies for alternative development
to coca and job creation in the jungle. END SUMMARY.


SAMOAFIBER Q FASTEST GROWING CELLULOSE?
--------------

2. Gynerium sagittatum (called samoafiber, or
in Peru cana brava) is a riverine grass found
in the northern Amazon basin. While growing wild
in other nations, in Peru the plant forms vast
monocultures. Amcit William New, CEO of SFH, told
us of his research to demonstrate that samoafiber can
be successfully farmed. Samoafiber produces 5,000 dry
tons of cellulose per year per hectare (ha),four
times more than the fastest growing wood and 12
times more than other energy crops or
agricultural waste material. It grows at a constant
rate year round.


3. SFH is investing in Peru because of recent German
technology that efficiently converts cellulose to a
bio-oil which can be combusted for energy or converted
to ethanol. CEO New reported to us that Samoafiber
costs considerably less to refine than sugar cane for ethanol.
Samoa Fiber biofuel can be produced for $8.73 BOE (Barrel of
oil equivalent). A plantation of 15 ha would produce the
energy equivalent of 3,000,000 barrels of crude oil annually.

COMPARED TO ETHANOL
--------------

4. According to CEO New, Samoafiber oil can be mixed
with engine fuel to run cleaner and increase octane.
It has many of the same characteristics of ethanol,
but can be produced at a much lower cost Q or converted
to ethanol. SFH uses a relatively new but proven
German technology called Fast Pyrolysis (FP). FP is
uniquely suited to combine with fast-growing samoafiber
to provide a cellulosic crude oil to supply the
gasification market. FP uses heat to extract slurry from
samoafiber that has the same energy content as low grade
coal and a similar consistency to crude oil. The refining
units are fairly inexpensive (roughly $10 million/per unit)
and the components can be transported fairly easily to riverine
plantations. (NOTE: this part of the Amazon basin has few roads.
Most commerce is by barge. End note.)

SFH INVESTMENT
--------------

5. CEO New met with President Garcia and Minister of Agriculture,
Jose Salazar in September. New said both were supportive, and
Salazar agreed to concession 25,000 ha in Ucayali, Huallaga,
and Iquitos. (Note: most land in riverine Amazon is untitled,
aside from that reserved for indigenous communities. End Note.)
New invested $2 million in research and feasibility studies,
and now seeks financing of an additional $9 million to begin
farming and to build a pilot refinery, up to a total of $45
million ultimately needed to build three refineries.


6. Further information can be found at SFHQs website:
www.sfiber.com. Post ESTH officer Hal Howard, howardhh@state.gov,
has additional technical data on samoafiber.

STRUBLE