25/03/2009 (Mongabay.com) - Malaysia's Land Development Authority FELDA will soon break ground on a joint venture with a Brazilian firm to establish 30,000-100,000 hectares (75,000 - 250,000 acres) of oil palm plantations in the heart of the Amazon rainforest, reports the Malaysian Star.

Brazil's Ambassador to Malaysia, Sergio Arruda, said the venture will start with 30,000 hectares cultivated near Tefe and Manuas. He said the land will be cultivated by 500 families.

FELDA has a 70 percent stake in the venture, called Felda Global Ventures Brazil Sdn Bhd, while Braspalma of Brazil holds the balance.

The project would include the establishment of a production plant which would lead to the development of a "state-of-the-art" palm oil biodiesel facility.

The venture could be the first of many oil palm projects in the Brazilian Amazon. Congress is weighing a law that would allow landowners to count plantations as forest towards their legal forest reserve requirement. By law landowners in the legal Amazon must retain 80 percent forest cover on their holdings.

A recent study estimated that 2.3 million square kilometers of the Brazilian Amazon are suitable for growing oil palm.