Palm oil producer Brazil Biofuels (BBF) has teamed up with fuel distributor Vibra Energia on the construction of the country’s first hydro-treated vegetable oil (HVO) plant, according to local media reports AgriCensus wrote.

BBF would invest BRL1.8bn (US$323M) in the new unit that would use palm oil as feedstock, the report said, with operations due to start in Manaus in Amazonas state by 2025.

Under the agreement, Vibra Energia would commercialise the whole output of the plant that would have an initial capacity to produce 500M litres/year of palm oil-based HVO, the report said.

“Vibra has been contacted by clients such as the mining and agribusiness industries that need diesel to operate their supply chains and that have a decarbonisation agenda,” Vibra’s executive operations director Marcelo Bragança told the local business newspaper Valor Econômico.

Brazil is looking into setting a 2% HVO mandate in the country’s biodiesel blend, Bragança said. However, even without the mandate the outlook for HVO demand in the country was favourable, he added.

BBF said it would source palm oil from its units in the north of Brazil and from 10 new areas that the company has mapped in the Amazon region, AgriCensus wrote.