| Summary: | Thesis ( MTech (Business Administration))--Cape Peninsula University of Technology, 2016. === Capital investment in bioethanol production requires sound economic feasibility studies.
This study investigated the economic feasibility of using maize as a feedstock to produce
bioethanol in South Africa. There is a huge opportunity to use dedicated underutilised
arable land to grow maize which can be used for both consumption and bioethanol
production. The study used 200 000 ton/year of maize that could have been exported to
SADC countries to size a plant that produces 80 million litres per year of bioethanol. An
advanced bioethanol processing technology that separates the fibre/bran which is burnt in
a steam boiler to produce process steam was selected owing to advantages such as low
energy consumption and capital expenditure on fermentation and distillation equipment.
This study employed a combination of qualitative and quantitative methods to gather data.
The findings from a qualitative instrument indicated that a majority of respondents were in
favour of the decision of excluding maize made by the South African government. Putting
security of food at risk and uncertainty in the profitability of a maize-fed bioethanol plant in
the South African context, were two of the primary reasons the respondents opted for an
explicit exclusion of maize as a feedstock. Findings from quantitative analysis revealed that
the profitability of the bioethanol plant was largely influenced by the prices of feedstock and
bioethanol. The 2016 fiscal year indicated the worst case scenario in terms of economic
viability of the bioethanol. The astronomically high price of maize due to drought
(R5000/ton) rendered the project unprofitable as all of the economic indicators were
negative. In the same marketing year, however, the trade balance of maize was positive,
indicating a surplus. The study recommended that all of the surplus maize should be
exported because it is not economically viable to build a bioethanol plant.
The 2011 fiscal year indicated the best case scenario in terms of the economics of the
project. This was due to the decrease in price of maize (R1726/ton) and a slight increase
in the price of bioethanol. All of the economic indicators were positive, suggesting the
benefits of investing in bioethanol production. It was recommended that under normal
conditions of maize production in South Africa, a bioethanol plant can be operated
simultaneous to maize exportation to other countries without compromising food security,
because a maize-fed bioethanol plant uses only a small proportion of maize (14.3%) from
the total volume of maize that is exported. Furthermore, it generates more revenue (99.9%)
compared to the maize export revenue. It was recommended that sensitivity analysis
should be conducted in a holistic manner whereby all variables in the economic model
must be adjusted to assess the impact of each on the overall project profitability.
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