March 31, 2009 / 4:25 PM / 11 years ago

UPDATE 2-China asks to plant 2 mln ha of jatropha in Zambia

* Only 10,000 hectares used for jatropha so far

* Industry group lobbying to increase acreage

(Adds details, context on land investments in Africa)

By Muchena Zigomo

MIDRAND, South Africa, March 31 (Reuters) - China has asked Zambia to plant 2 million hectares of jatropha in the Southern African country for production of biofuels, the Biofuels Association of Zambia (BAZ) said on Tuesday.

If agreed, the deal could become one of the biggest farming land ventures by an Asian or Middle Eastern country in Africa.

“China has approached the Zambian government to plant 2 million hectares of jatropha in Zambia,” BAZ director Tyson Chisambo told Reuters on the sidelines of a biofuels conference.

“We are still waiting for more details,” he said.

Jatropha is a non-food crop whose oil can be used to produce biodiesel. It can be grown on semi-arid land and poses less of a threat to food production than other biofuel feedstocks such as grains and vegetable oils, supporters argue.

Chisambo said Zambia currently had only 10,000 hectares under jatropha, though his association was lobbying for an increase in the acreage.

“We have investors in biofuels from some other countries such as Australia, and there are companies supporting outgrower schemes in the country, so it is a work in progress,” he said.

Zambia is well-endowed with both surface and underground water, and its climate is suited to a wide range of crops including wheat, soya bean, cotton, jatropha and sugar cane.

Currently only 15 percent of the 25 million hectares of arable land are being used for food crop production, a Frost & Sullivan analysis said.

Chinese markets remain hungry for crops grown in Africa and there is debate over whether the money, jobs and expertise they bring will help or just exploit the world’s poorest continent.

South Korean firm Daewoo Logistics had planned to lease a million hectares of Madagascar — equivalent to the size of Qatar — to grow food, reducing the Asian country’s dependence on U.S. or South American imports.

But the island’s new leader, Andry Rajoelina, called off the deal, saying the land was neither for rent nor sale, exposing the risks of such ventures in Africa.

BIOFUELS PROMISE

Chisambo told the conference earlier that Zambia’s government had approved an energy policy which incorporates renewable energy and biofuels.

It has allowed for biofuels to be traded as a petroleum product and defined standards for biodiesel and bioethanol.

He said Zambia still needed to develop proper incentives and define blending ratios and timelines. Possible incentives for the sector included putting in place duty free arrangements for machinery imports and funding incentives, he said.

“we are looking at things like interest free loans or long term payment plans to encourage investment,” he said.

Industry analysts say Zambia exhibits significant potential as producer and consumer of biofuel products, owing to a rise in fuel demand on the back of a thriving copper mining industry and suitable feedstock production sites.

Frost & Sullivan said the country could produce as much as 50 million litres of biofuels by 2013.

But the development of the industry will depend on multinationals and investors to transfer skills, fund the venture and assist with sustainable feedstock development. (Writing by Agnieszka Flak; editing by James Jukwey)

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