Brazil is booming, and Lwart (pronounced Lewart) is part of that dynamic growth.

Lenis Paulista, 300 kilometers from Brazils 20-million-soul megalopolis of So Paulo, is home to family-owned Lwarts pulp mill, to its chemicals business, and to Lwart Lubrificantes, the groups used oil collection and rerefining business.

Lwart is poised to become Brazils first domestic source of API Group II base oil, when its new 150,000 cubic meter per year (about 135,000 metric tons/year or 2,550 daily barrels) rerefinery opens early this year in Lenis. By 2016, it will be joined by state-owned oil giant Petrobras, which announced plans last year to build its own 400,000 cubic meter per year virgin Group II plant at a new refinery in Rio de Janeiro.

Grupo Lwart Chief Executive Officer Carlos Renato Trecenti and Lwart Lubrificantes General Manager Thiago Luiz Trecenti welcomed LubesnGreases to Lenis to talk about the companys past, present and future.

All in the Family

Lwart Lubrificantes, the oldest company in Grupo Lwarts portfolio, was established in 1975 by Italian immigrant Carlos Trecentis four sons, Luiz, Wilson, Alberto and Renato Trecenti, whose first initials gave the company its name. Lwart is 100 percent family-owned, explained Carlos Trecenti. With more than 25 individual shareholders today, four holding companies represent the four original brothers families, each with a 25 percent share. The current four-member board of directors consists of surviving founders Alberto and Renato Trecenti, Ademir Rorato (son-in-law of founder Luiz), and Wiverson Trecenti (son of founder Wilson).

CEO Carlos, son of founder Renato, and General Director Thiago, grandson of founder Luiz, are the only family members employed by Lwart. We have created a good structure and good forums for the family business, and its working, the CEO said.

The group employs 1,800 in Lenis alone, of which about 700 work for Lwart Lubrificantes. An additional 400 employees staff Lwart Lubrificantes used oil collection program nationwide. Brazil has basically zero unemployment, and its very challenging to hire, especially certain specialties like engineering, higher level maintenance and construction, Carlos Trecenti noted. But were seen as one of the best places to work in the area.

Investing for Group II

Lwart operates two Group I rerefineries. Lenis, the first and largest, began operations in 1979. It uses a process based on wiped-film evaporator deasphalting and acid clay treatment to process up to 120,000 cubic meters/year of used oils. The second unit, acquired in 2008, is in Feira de Santana in Brazils northern state of Bahia, and has 20,000 cubic meters/year of used oil capacity. It uses a process based on propane deasphalting.

At the new Group II plant, under construction next to the existing Lenis Group I plant, two of four reactors were up by late October. Ninety percent of the equipment was produced in Brazil, including the reactors, Thiago Trecenti pointed out. The new plant will run 24 hours a day, except for an annual maintenance turnaround.

Lwart contracted with Chemical Engineering Partners of Irvine, Calif., for plant design and is licensing CEPs technology. CEP technology is in use at Evergreen Oil, Universal Lubricants and Heartland Oil in the United States, at PT Wirawasta Gemilang in Indonesia, and elsewhere.

Lwarts Group II plant was originally scheduled to stream by the end of 2011, but the start-up date has shifted to early this year. Brazilian used oil is more complicated and very poor quality, Carlos Trecenti explained, so the original design had to change. We had to include additional equipment and tanks to process the Brazilian oil.With U.S. used oil, a plant could be smaller and running by now.

The best used oil is from car dealers. Its less contaminated, Thiago Trecenti added. Warranties on new cars are now five years, so people have their oil changed at dealers. Fifteen years ago service stations did all the oil changes.

Because of the poor quality of the used oil that feeds it, Line One, the original Group I plant, goes down for maintenance for three or four days every 60 days. At Line Two, the new plant, every truckload of incoming used oil will be sampled and tested, and the oil will be directed to one of four tanks, depending on quality. Lwart will use a computer-controlled mixing system, pulling and blending used oil from the four segregated tanks, to assure consistent quality of feed-stock going into Line Two, said Engineer Ana Claudia de Oliveira Zaia.

Step by Step

The CEP process is based on vacuum distillation using wipe-film evaporation and hydrotreating; it is an acid-free method. The six-step procedure consists of pretreatment; water and light fraction removal; fuel oil fraction removal; separation of lubricant by distillation; conversion of lube distillate to base stock through hydrotreatment; and finally, splitting the base stock into desired cuts through fractionation.

The new rerefinery is built in three blocks, a front-end block, a middle utilities block, and a back-end block, Zaia continued. The carefully blended used oil goes to the first block, where caustic is added, and the light ends and water are removed. Evaporators are the main event in block one. The oil then goes to the back-end block, where the oil passes sequentially through four reactors, each 30 meters tall with catalysts inside. The output is Group II base oil, Zaia said.

The Group II oil then goes back to the front-end, where the fractionator is located, to produce light, medium and heavy neutral products, which then go into storage tanks for delivery to customers. Lwarts three grades will be a light 4.5 centiStoke viscosity, a medium 7.5 cSt, and a heavier 10.8 cSt, all at 40 degrees C. In the end, about 62 percent of the plants feed will become Group II, and another 9 percent light fractions.

When construction is complete, the plant will have a total of 20,000 cubic meters of used oil storage and 8,000 cubic meters of base oil storage. Most of Lwarts sales are CIF; that is, we sell delivered. It lowers the risk of contamination, Thiago Trecenti said.

Exploiting Synergies

Brazils lubricant blenders are concentrated in Rio de Janeiro state, far from Lenis Paulista. Eighty-five percent of our base oils go to Rio de Janeiro, and the logistics are better in Rio, Thiago Trecenti said. But the synergies in Lenis are better.

Grupo Lwart runs a thermoelectric plant at its pulp plant, less than four kilometers from the rerefining site, making the plants completely energy independent. The asphalt flux from the rerefinery becomes one of the principal raw materials for sister company Lwart Quimica. Linde, the international industrial gas company, is building a hydrogen plant on the Lenis site, to be completed by April. Lwart will supply energy to the Linde hydrogen plant, and it will supply hydrogen to the rerefinery. Well use trucks to supply hydrogen from start-up until the Linde plant is complete in the second quarter, Thiago Trecenti said.

Lwart runs its own fire department and clinic, and treats wastewater on-site in Lenis.

We have to train all our own staff, General Director Thiago continued, including the laboratory staff of 16. The new base oil plant will not use the same controls as the old plant, so staff transferred to the new plant must be trained. Our training runs from January to December, by our own staff with some help from some suppliers.

Perhaps most critical to the rerefiners success, Lwarts rerefineries are supplied by Lwarts own used oil collection system, far and away Brazils largest. The company owns 300 trucks; 250 are used for collection throughout Brazil and 50 larger tanker trucks deliver to and from the rerefineries.

Qualitys Challenge

Rerefined lubricants face a struggle for acceptance in Brazil. To date, the Trecentis concede, most of their Group I products are used in industrial applications. Customers are now demanding higher-quality base oils, however, and we have to produce quality Group II, Carlos Trecenti said.

Customers are not demanding rerefined oil; they are demanding quality Group II, concurred Thiago Trecenti, prompting Lwarts decision to build the new plant. Our future Group II will go to automotive lubricants.

Lwart Lubrificantes, with sales of about 220 million Brazilian reais a year (U.S. $124 million), has invested over $150 million in the new rerefinery. Financing for the project came 50 percent from Brazils National Development Bank, 50 percent from the companys own capital.

Recognizing the need for motor oil certifications in the automotive sector, Lwart is working with a major additive company for approvals, so customers can offer API-licensed motor oils.

Security of supply is another big advantage for our customers, said Carlos Trecenti. We can deliver just in time.

Asked about pricing for the rerefined Group II base oils, Carlos Trecenti paused. Were still studying pricing. Petrobras Group I is the reference for the market, but now imported products set a higher mark. Were in the last rounds of deciding. Our price will reflect higher quality and performance.

Looking at the future, used oil collection could become a bottleneck, Carlos Trecenti said. We added 60 trucks in the last two years, and were studying being more efficient with our collection centers.

Lwarts business plan calls for stepped-up investments in collection, particularly in Brazils fast-growing northeast. And Lwart will increase capacity by 20 percent at the Bahia rerefinery in the next few years, going from 20,000 to 24,000 cubic meters per year.

Grupo Lwart is very proud of its 30-plus year record of innovation, growth and reinvestment. Indeed, Carlos and Thiago Trecenti confirm, Lwart takes very seriously its commitments to its customers and suppliers, to its employees and their communities, and to the environment.