SAO PAULO, Brazil, June 28 (Reuters) - Bunge Alimentos, the Brazilian unit of world leading soybean processor Bunge Ltd. , began a feasibility study for a biodiesel plant that could be constructed after the government drafts regulation for the fuel, a company director said on Monday.
The National Petroleum Agency (ANP) is expected to publish rules in November for the new market, which several government ministries are currently discussing.
"We have interest in the area ... It would be a way to create demand for farm products," said Bunge's director of technology and innovation Jose Zilio. "When we have a legal base, it will be clearer where the plant could be put."
He added that possible sites included Rondonopolis -- a large staging point for the movement of grains in the center-west state of Mato Grosso, Campo Grande in Mato Grosso do Sul and in Urucui in the northeast state of Piaui.
Bunge Alimentos has grain processing plants in the above mentioned cities.
Zilio said Bunge has produced biofuel for 14 years in Italy, Germany and Australia.
Sources involved in the creating new regulations say a 2 percent biodiesel voluntary mixture with conventional diesel may be adopted initially, but would likely rise to 5 percent in 2005.
Biodiesel has been used for several years in the fuel of some municipal bus fleets in southern Brazil to reduce urban air pollution.
Biodiesel in Brazil has been typically composed of 90 percent vegetable oil, such as soy or palm, and 10 percent cane-based ethanol.
With an annual consumption of roughly 32 million tonnes of diesel in Brazil, a 2 percent mixture would represent a 600,000 tonne demand for the biofuel, Bunge data showed.
But Zilio said it would be impossible to meet a demand of this size, despite Brazil's massive agricultural output.