VZCZCXRO6232
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0709 3620904
ZNR UUUUU ZZH
R 280904Z DEC 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 1224
INFO RUEHOO/CHINA POSTS COLLECTIVE 0408
RUEHBJ/AMEMBASSY BEIJING 0985
RUEHGH/AMCONSUL SHANGHAI 0336
RUEHCN/AMCONSUL CHENGDU 0337
RUEHSH/AMCONSUL SHENYANG 0346
RUEHHK/AMCONSUL HONG KONG 0400
RUEHIN/AIT TAIPEI 0297
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0224
RHMFISS/DEPT OF ENERGY WASHINGTON DC 0051
RUEAIIA/CIA WASHDC 0378
RUEKJCS/DIA WASHDC 0374

UNCLAS GUANGZHOU 000709 
 
SENSITIVE 
SIPDIS 
 
State for EAP/CM, EB/ESC, OES/ENV, INR/EAP; 
USTR for China Office 
Beijing for FCS, ESTH and DOE 
 
E.O. 12958: N/A 
TAGS: ENRG SENV ETRD EINV EAGR PGOV CH
SUBJECT: Bio-fuel Plant Taking Root on Guangxi's Coast 
 
REF: GUANGZHOU 707 
 
(U) This report is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary: Guangxi is expanding its use of bio-fuels and 
COFCO Bio-Energy, in the city of Beihai, is playing a key role.  The 
firm uses cassava root to produce ethanol that is sold in gas 
stations throughout the autonomous region.  In addition, it uses the 
plant's solid waste and methane produced from waste water for fuel. 
Sinopec is one of the firm's two customers and also owns a 15% stake 
in the project.  However, the firm is still not profitable and 
receives subsidies from the government, according to the plant 
manager.  End summary. 
 
¶2. (SBU) Guangxi Zhuang Autonomous Region is diversifying its energy 
mix with a bio-fuels plant in the coastal city of Beihai.  The 
Guangxi COFCO Bio-Energy Co. Ltd. plant has been operational since 
¶2008.  It uses cassava to produce ethanol to be mixed with gasoline. 
 The cassava root is smashed and liquidized before it is fermented 
to produce ethanol distilled to a purity of 99.5%. 
 
Waste Not 
--------- 
 
¶3. (SBU) Guangxi COFCO General Manager Liu Shuhai pointed out to the 
Consul General on his recent visit that the plant's waste water is 
also bio-processed to reduce environmental impact.  The methane 
byproduct of the waste treatment is used for power generation.  Liu 
also explained that the solid waste is dried and used as fuel.  He 
noted that coal available in Guangxi is low-quality brown coal.  The 
cassava solid waste fuel supplies about the same amount of heat as 
brown coal but emits no sulfur dioxide, Liu said.  The firm is also 
researching the option of converting the cassava solid waste into 
fertilizer. 
 
COFCO-Sinopec Partnership 
------------------------- 
 
¶4. (SBU) Guangxi COFCO Bio-Energy is a subsidiary of China National 
Cereals, Oil and Foodstuff Corporation (COFCO), the country's 
largest food processor and trader.  The management and technicians 
at the Guangxi plant are assigned by COFCO headquarters, Liu said. 
About 70% of the firm's employees are local Guangxi residents. 
 
¶5. (SBU) Sinopec and Petrochina purchase all of the ethanol output 
of the plant, which is sold in gas stations throughout Guangxi, 
according to Liu.  Sinopec and Petrochina control 80% and 8-9% of 
gas stations in Guangxi, respectively.  Nearly all of Guangxi's gas 
stations sell a gasoline mix that is approximately 10% ethanol. 
Sinopec also owns a 15% stake in the Guangxi COFCO plant. 
 
Still Not Profitable 
-------------------- 
 
¶6. (SBU) Liu pointed out that Guangxi is a major producer of cassava 
with an annual output of about seven million tons; Beihai accounts 
for about 1.5 million tons.  However, Guangxi COFCO still needs to 
purchase cassava from sources outside the autonomous region.  Liu 
said the firm was working with government, enterprises, financial 
institutions, research institutes, and farmers to develop secure 
supplies within Guangxi.  The company currently signs long-term 
procurement contracts with large farming units.  The government sets 
a minimum price for the cassava, and COFCO also tries to help 
farmers increase their income by providing seeds and technical 
assistance to increase output.  Liu acknowledged that the firm was 
not yet profitable and that the model needed work, noting that the 
firm still received subsidies from the government for its ethanol 
production. 
 
GOLDBECK