UAE's Mubadala Capital has announced plans to inject $13.5 billion into Brazil's biofuel market over the next decade, signaling a significant push towards renewable energy. Oscar Fahlgren, head of Brazil strategy at the sovereign wealth fund, revealed this ambitious initiative in an interview with the Financial Times. The investment aims to bolster the production of renewable diesel and sustainable aviation kerosene, primarily sourced from non-food plant matter.
Fahlgren outlined the strategy, stating that the funds will be raised through a blend of equity and debt over a span of five to 10 years. The project, spearheaded by Mubadala's Brazilian subsidiary, Acelen, will commence development of a large-scale biofuel project by 2026. This endeavor will comprise five modules, each valued at $2.7 billion, featuring biorefineries capable of processing 20,000 barrels of fuel per day, alongside essential infrastructure and cultivated acreage to sustain the input crop.
“It's all about feedstock (which) in reality is agriculture. And Brazil is probably the best-placed country on the planet when it comes to agricultural proficiency because of the climate and the fertile soil,” Fahlgren emphasized. He likened Brazil's significance in agriculture to Abu Dhabi's stature in oil production.
Moreover, Mubadala plans to repurpose an existing oil refinery in Bahia, acquired from government-owned Petrobras in 2021, as part of the biofuel project. Fahlgren underscored the significance of this capital project, expressing optimism about investing in Brazil's green energy transition space.
This venture into bioenergy builds upon Mubadala's existing $6 billion investments in Brazil, constituting approximately a quarter of the group's global portfolio. Fahlgren highlighted the fund's longstanding commitment to Brazil, contrasting it with the reticence of many foreign investors.
In addition to the biofuel initiative, Mubadala intends to establish a stock exchange in Brazil next year through its Americas Trading Group. Fahlgren justified this move, stating, “Brazil is a very large country. It has only one stock exchange. And I think that's suboptimal infrastructure for the players that operate in this segment.”
The Emirati sovereign wealth fund's asset management arm is increasingly optimistic about Brazil's investment climate, with diverse holdings ranging from metro lines to a majority stake in the local owner of the Burger King brand. Fahlgren noted the maturity of several assets, hinting at potential exit opportunities in the near future.
