Cablegate: Brazil Esth Update, July/August 2006

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TO RUEHC/SECSTATE WASHDC PRIORITY 6399
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RUEHSO/AMCONSUL SAO PAULO 7769
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UNCLAS SECTION 01 OF 02 BRASILIA 001711

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E.O. 12958: N/A
TAGS: SENV TNGD KSCA EAGR BR
SUBJECT: BRAZIL ESTH UPDATE, JULY/AUGUST 2006

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NEW BIODIESEL FACTORY
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1. American Company Archer Daniels Midland (ADM) has announced
construction of a biodiesel plant in the state of Mato Grosso. ADM
will invest a total of USD 30 million in the refinery, which will be
the biggest biodiesel-producing plant in the world with a yearly
production capacity of 180 thousand tons of the fuel. The company
is already the leading biodiesel producer in Europe and will use
soybean oil as its main input in Brazil. The new refinery will be
totally integrated with the company's soybean compressing company in
Mato Grosso by the first semester of 2007, and will be ADM's first
biodiesel investment in Brazil. Their soybean compressing operation
currently produces 2 million tons of soy oil a year.

BRAZIL LIKELY TO MEET BIODIESEL TARGET EARLY
--------------------------------------------
2. President Lula recently announced the possibility of attaining
the 2% biodiesel mix obligation target early, following an
announcement the Brazilian Association of Biodiesel Industries
(ABIOdiesel) was made. According to Brazilian law, by 2008 all
conventional diesel sold in the country must incorporate a 2%
mixture of biodiesel and a 5% mix by 2013. At present, this
addition is optional, although approximately 2000 gas stations are
already selling the product. According to Energy and Mines
Minister, Silas Rondeau, seven biodiesel companies are operating in
Brazil, while another 14 await GoB approval and 16 others are under
construction. Each company has an approximate 123 million
liter-per-year production capacity and over 205 thousand small
farmers are part of the country's national biodiesel program. Since
the 2008 production goal of 840 million liters has already been
reached, the program's targets are likely to be reviewed.

NATURAL GAS INVESTMENT BOOST
----------------------------
3. Petrobras' Energy and Gas Director, Ildo Sauer, announced a USD
22.1 billion investment for the company's gas sector through 2011.
The company itself will invest USD 17.6 billion, while its partners
will invest another USD 4.5 billion. The state company expects to
raise its gas production by 17% a year, expanding from 41 million
cubic meters a day to an estimated 70 million. Sauer said that this
increased investment was the solution found to satisfy growing
national demand, especially after Bolivia's recent gas
nationalization.

ETHANOL EXPORT RISE
-------------------
4. Brazil registered a record 568 million liters ethanol exports in
July, more than double the 268.2 million liters shipped abroad
during the same month last year. Despite the 54 cents-per-gallon
import tariff, U.S demand accounted for 84% of the total volume,
according to data from the Ministry of Agriculture. Ethanol
revenues for the month were USD 289 million, nearly four times as
much as the USD 75.5 million registered in the same period a year
ago. Apart from the U.S, the European Union and Venezuela were also
key buyers of Brazilian ethanol.

NEW DIABETES TECHNIQUE TESTING
------------------------------
5. Two medical centers in Sao Paulo are testing a new treatment for
Type 2, Diabetes. The new technique is being tested in patients
with a Body Mass Index (BMI) lower than 35, who undergo an
intestinal surgery that stimulates the hormone responsible for
insulin production. Even though testing is still in its initial
phases, the results for the first four patients have been promising.
One of them no longer needs to take insulin shots, while the other
three have reduced their dosage by approximately 33%. Approval for
additional testing is expected in the coming months.

MANAGED LOGGING SPARES BIODIVERSITY
-----------------------------------
6. Low impact, managed logging has little effect on biodiversity
according to a recent study from the Environmental Research
Institute of the Amazon (IPAM). At an average extraction rate of 19
cubic meters per hectare, a small number (3-15%) of original species
are not present in the area anymore. However, data show that, on
average, the number of birds and invertebrates rose slightly and
mammal species remained the same. IPAM's research coordinator,
Claudia Azevedo-Ramos, said that the long-term results still need
more detailed analysis but the economic viability of this action
exists. Ramos was quoted as saying, "the initial cost of cutting
wood is higher, but after that its exploitation is more precise".

WORMS DETECTING CONTAMINATED SOIL
---------------------------------
7. Worms are being used to test the contamination level of soils in
areas where mining activities and petroleum exploitation have taken
place. Researchers from the Center for Mining Technology Laboratory
(Cetem), part of the Ministry of Science and Technology (MCT),
studied three soil samples and compared worm mortality in them to

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samples of uncontaminated soil. The number of deaths compared among
the samples determines the level of contamination from the different
activities. Cetem is also testing other insects to be used in river
contamination analysis.

AVIAN INFLUENZA EDUCATIONAL CAMPAIGN
------------------------------------
8. For the first time in ten years, the GoB will publicly address
the issue of avian influenza. The ad campaign targets the one
million inhabitants that live in nearby regions of national parks
and other wild bird habitat locations. The GoB's concern is due to
the beginning of the migratory season. Even though most birds
migrate to Brazil from North America, where no avian influenza cases
have been recorded, studies show the possibility of a rare direct
migration from Asia, Africa and Europe. Due to these possibilities,
the Ministry of Health has decided to start an informational
campaign explaining what to do in case of an AI outbreak in the
country. The campaign will use folders, pamphlets and radio to
disseminate educational information.

SOBEL

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