Mubadala will invest $13.5 billion in biofuels in Brazil

Mubadala Capital, the investment arm of the Abu Dhabi Sovereign Wealth Fund, is gearing up for a significant venture into biofuels within Brazil. This $13.5 billion initiative forms part of a broader investment strategy for the country, with potential endeavors including the establishment of a new stock exchange, as stated by Oscar Fahlgren, the company’s leader.

Mubadala Capital emphasizes the pivotal role of feedstock, essentially agriculture, in this endeavor. Brazil stands out globally due to its agricultural prowess, owed to its favorable climate and fertile soil, much like Abu Dhabi’s significance in the realm of oil.

As per reports, the ambitious plan entails the construction of five processing units, each valued at $2.7 billion and capable of producing 20,000 barrels of biofuel per day. The inaugural unit is slated to commence operations by the conclusion of 2026.

Additionally, a portion of the biofuel investment will be allocated towards repurposing an oil refinery into a biofuel facility, as revealed by the head of Mubadala’s Brazilian operations, referencing the refinery acquisition in Bahia in 2021.

As per reports, Fahlgren underscores the significance of this capital endeavor, foreseeing ample opportunities within Brazil’s green energy transition sector.

Despite challenges like subpar sugarcane harvests, gasoline subsidies, and financial hurdles, Brazil maintains its status as the world’s foremost bioethanol producer, contributing a fifth of global output. In 2022, production stood strong at 409,000 barrels of oil equivalent daily, marking an increase from the previous year’s 391,000 barrels.

Mubadala boasts a decade-long presence in Brazil across diverse sectors, collaborating with external investors who contribute about two-thirds of the capital deployed in the region.

According to one estimate, biofuels satisfy roughly 25% of Brazil’s road transport fuel demand, further underscoring the sector’s significance.