* Plant to be Brazil's first for 2nd gen ethanol
* BNDES investment arm also owns 15 pct stake
* Other firms also investing in cellulosic in Brazil
SAO PAULO, May 8 (Reuters) - Brazilian development bankBNDES approved a 300.3 million real ($150 million) loan for thesecond generation ethanol project of the local GranBioInvestimentos Group, which would be the first commercial-scalecellulosic ethanol plant in the country.
The bank's investment arm, BNDESPar, announced in Decemberthat it would take a 15 percent equity stake in the project for600 million reais.
The plant, which will be built in the municipality of SãoMiguel dos Campos in the northeastern state of Alagoas, willproduce 82 million liters of ethanol a season using cane bagasseas a biomass feedstock.
GranBio plans to develop green plastics as well as biofuelsand enhanced genetic material for sugar cane varieties with theproject. The 100 percent Brazilian-owned company acquired a 25percent stake in April in the U.S. American Process Inc, givingit access to the company's biomass processing technology.
Research into cellulosic ethanol production has made majoradvances in the laboratory over the past decade but the newtechnologies have not been fully tested on a commercial orindustrial scale, which raises the stakes for investments inplants at this stage.
The first plants to produce large volumes of cellulosicethanol will get a premium for their product. But chemicalengineers currently hammering out designs for new secondgeneration ethanol plants say many of the first commercialcellulosic plants built may be obsolete or unsustainable in amatter of a few years.
Brazil's sugar cane ethanol sector has announced a slew ofnew investments into building cellulosic ethanol plants in thepast several months, including eight plants by Raizen -- thejoint ventures between Brazilian sugar and ethanol giant Cosan and oil major Royal Dutch Shell.
