Apr 12, 2010
Bunge To Expand Its Sugar/Ethanol Operations In Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The Bunge Corporation is looking to expand its presence in Brazil's sugar/ethanol market. Earlier this year, they purchased Grupo Moema and its five sugar/ethanol mills for US$ 1.5 billion and now the company is studying the purchase of another sugar/ethanol mill, Usina Mandu in the state of Sao Paulo.
According to its new president, Pedro Parente, the company is in the process of combining all of its divisions, food, ingredients, fertilizers, sugar, bioenergy, and agribusiness into one operation called Bunge Brasil. In a recent interview, he indicated that the company would invest US$ 2.8 billion in its Brazilian operations during 2010-2012. Of that total, US$ 2.24 billion will be invested in the sugar/ethanol sector and that US$ 750 million will be used to grow the business organically in addition to outside purchases.
Bunge Brazil currently has eight sugar/ethanol mills in Brazil. Five mills came with the purchase of Grupo Moema. It had partial ownership in two prior mills, one in Minas Gerais and one in Mato Grosso do Sul and they are completing the construction of a new mill in the state of Tocantins, which will begin operations in June.
Bunge Brasil now has the capacity to process 21 million tons of sugarcane per year and produce 1 million tons of sugar and 1 billion liters of ethanol per year. This makes Bunge Brasil the third leading sugar/ethanol producer in Brazil following Cosan and Louis Dreyfus Commodities. According to Parente, Bunge's plan is to increase its sugarcane crushing capacity to 30 million tons within the next three years.
Even though much of the near-term investments are geared toward the sugar/ethanol sector, Parente emphasized that they are not ignoring their traditional agribusiness sectors. He indicated that more resources are being put into the sugar/ethanol sector because it's new and still maturing. Bunge plans to expand their crushing plant in Rondonopolis, Mato Grosso and their grain handling facility in Alto Araguaia, Mato Grosso. They are also contemplating entering into the biodiesel business as a way to add value to their soybean oil.