TOKYO, Feb 22: Japanese trading house Marubeni Corp. said on Thursday it will invest $40 million in a joint venture in Brazil to produce and market a soybean-based diesel fuel.

The major Brazilian grain trader Agrenco Group would have the remaining 66.7 per cent stake in the $120 million joint firm named Agrenco Bio-Energia Ltd., Marubeni said in a statement.

A formal contract on the deal would be signed by the end of this month and the new firm was scheduled to start operations in early 2008, the statement said.

Global demand for such a bio-diesel fuel was expected to rise globally, particularly in Brazil and Europe, “in view of rising fossil fuel prices and growing concerns about the need to protect the environment,” Marubeni said.

Marubeni also aims to secure a supply source for soybean meal, which has been in growing demand in Asia.

In Brazil, demand for bio-diesel fuel is expected to rise, as the Brazilian government has enforced a rule under which mineral diesel must be blended with bio-diesel fuel from 2008.

The new unit will have an annual production capacity of 400,000 tons of bio-diesel fuel and one million tons of soybean meal, with sales targeted at $480 million for the initial year. —AFP