Bagasse is the fibrous residue remaining after sugarcane stalks are crushed to extract their juice.
The two companies plan to build a cellulosic ethanol plant using KL Energy’s enzymatic process, with startup in 2010.
Few details about the agreement were immediately available.
"KL Energy had been looking for opportunities to enter the Brazilian ethanol market,” KL Energy chief executive Steve Corcoran said in a statement.
