Brazil - Agrofuels

Bunge purchases five sugarcane mills from Brazil's Moema Group

The US-based transnational corporation Bunge Ltd. acquired most of the Moema Group mill cluster and is about to become the third largest ethanol and sugar producer in the Brazil. To maximize profitability, it plans to intensify mechanization.

On Dec. 23, 2009, Bunge Ltd., a transnational corporation based in White Plains, New York, announced its purchase of significant stakes in the Brazilian sugar-alcohol consortium Usina Moema Participaçoes SA (Moema Par), based in Orinduva, São Paulo.

Through this transaction, Bunge acquires a sugarcane mill wholly owned by Moema Par and the Brazilian group's stakes in four other plants. If the purchase of the entire capital stock of the six plants goes through, the deal will be worth 1.48 billion US dollars, which will be financed with common shares of Bunge Limited, in a transaction in Wall Street.

Moema has an annual processing capacity of 13.5 million metric tons of sugarcane. This capacity, added to the 2.5 million metrics tons processed in the Santa Juliana mill that Bunge already owns in Minas Gerais, will transform the US company into the third largest sugar and ethanol producer in Brazil, after Cosan and LDC-SEV, and followed by Guarani and São Martinho. The company will increase its production capacity even further in 2010 and 2012, when two new ethanol plants currently under construction, Pedro Afonso (in Tocantins) and Mote Verde (in Ponta Porã, Mato Grosso do Sul), become operative.

With these new plants, Bunge is not only expanding its global operations in Brazil's ethanol market -which has US$ 28 billion in annual sales- it's gaining a foothold in two states that are of strategic importance for the growing ethanol market: São Paulo and Minas Gerais. The deal will also boost the company's agribusiness sector -one of its three main areas of operation, along with edible oils and fertilizers-, which offers a significantly greater potential for profitability than fertilizer sales.

Bunge's profitability prospects in Brazil's sugar-alcohol industry are more eloquently expressed by its CEO Alberto Weisser in a statement posted in the company's website. “For sugar and bioenergy, Brazil is an ideal location in which to invest," Weisser stated. It has a fast-growing domestic market for ethanol and, because it boasts the world's lowest-cost production, is well-positioned to expand its exports of both sugar and ethanol.”

Its profitability will expand even more as Bunge takes full advantage of the topography of the region where the Moema Par mill cluster is located (on the border of the São Paulo and Minas Gerais states) and intensifies mechanization of sugarcane harvesting tasks. According to company sources, "the topography of the region should ultimately allow for approximately 95 per cent mechanization."