Lwart has invested U.S. $150 million in the new plant, which will use technology from Chemical Engineering Partners to produce rerefined base oil to meet specifications for high performance motor oils.

Trecenti, whose company is Brazils largest used oil collector and rerefiner, gave an overview of the countrys aggressive efforts to promote rerefining.

Rerefining in Brazil, he said, has received a strong incentive from legislation. In 1993, the National Petroleum Agency prohibited disposal of used oil for purposes other than rerefining. The program had dual goals: reducing dependence on imported oil and protecting the environment.

In 2005, the legislation was strengthened, spelling out that rerefining is the only legal destination for used oil. Under a new provision, lubricant producers and importers are responsible for collection and correct destination of used oil, based on their percent of the total volume sold per region, Trecenti said.

The program has been successful, with a huge growth in collection, he noted. In 1993, just 12 percent of the countrys collectible oil was collected. That soared to 35 percent in 2009. The law requires that 36 percent be collected in 2011.

Thirteen companies currently collect and rerefine in Brazil, plus an additional 29 independent – but mostly very small – collectors are active. The total used oil collection fleet numbers 650 tanker trucks, of which 300 are Lwarts. In 2009, rerefiners were responsible for 92 percent of all used oil collected, said Trecenti, and rerefiners supplied 192,000 cubic meters of rerefined base oil to the market.

Brazils collectors pay for the used oil. We believe paying for the used oil is a good idea. It provides an incentive for proper storage and inhibits illegal destinations, especially burning as fuel, he continued. But, he conceded, enforcement is difficult, given Brazils large territory, limited government resources, lack of environmental awareness, and the unfortunate fact that illegal destinations may pay a higher price.

In 2009, said Trecenti, rerefined base oil accounted for 17 percent of the countrys base oil consumption. Production from crude accounted for 54 percent, and imports for 29 percent.

Lwart, established in 1975, today has 800 employees and is Brazils only nationwide used oil collector, bringing in 140,000 cubic meters of used oil in 2009.

Lwart operates two rerefineries. The largest, in Sao Paulo state, was established in 1979 and has annual capacity of 120,000 cubic meters, using a process based on wiped-film evaporator deasphalting and acid clay treatment. The companys second unit, acquired in 2008, is in Bahia and has 20,000 cubic meters per year of capacity, using a process based on propane deasphalting.

In addition to its new Group II rerefinery, which is under construction next to Lwarts existing Sao Paulo plant, the companys major investments include 60 additional trucks and four new collection centers, bringing its total centers to 20.

Other Brazilian rerefining investments have also been announced, Trecenti said. Lubrasil is upgrading and increasing capacity, and Proluminas announced a capacity increase using wiped-film evaporation and hydrotreating.

Used oil collection trends include growing participation of car dealers, consolidation in industries generating used oil, and a growing concern about oil-change wastes. At the same time, Trecenti concluded, the perception of rerefined product quality is improving as Brazil sees higher demand for both Group II and Group III base oils.