Brazil mill buy puts Bunge on sugar production map

By Jess Halliday

- Last updated on GMT

Related tags: Bunge, Ethanol fuel

Agri-giant Bunge is making its first entry into the sugar and
sugar-derived ethanol market with an agreement to acquire a sugar
mill and ethanol production facility in Brazil.

Bunge has previously been active in global sugar marketing and trading, but has had ambitions of becoming a producer since sugar and sugar-based ethanol are seen as natural extensions to its core agribusiness activities. The planned acquisition of the Agroindustrial Santa Juliana mill in the state of Minas Gerais, Brazil, for an unspecified amount, is "an important step in Bunge's strategy to become a global and fully integrated player in the sugar and sugar-based ethanol market,"​ said chairman and CEO Alberto Weisser. ​He added that by integrating this new business and the employees that come with it into its other agribusiness activities, Bunge will expand it expertise and insight into the management of the entire sugar value chain. Moreover, Bunge's entry into the sugar production fray will allow it to leverage its risk management and logistics expertise, increase our connection to farmers and expand the product portfolio that it offers to its customers. The mill only commenced operations last year and presently has a capacity mill 1.6m metric tons of sugarcane a year. But Bunge has quick and bold plans to more than double this over the next few years. Its target is 4m metric tons "in the next few years".​ Raw material should be in no short supply. Current owner the Tenorio Group purposefully positioned the mill in southwestern Minas Gerais, in the midst of a major sugarcane growing region. It is also close to large domestic sugar and biofuel markets - and for export purposes it has rail connections with the ports of Santos and Vitoria. As for the biofuel angle to the business, the mill produces its own energy by burning a residual biomass left over from the sugarcane milling process. Other recent acquisitions effected by Bunge include an oilseed processing plant and a portfolio of edible oil brands in Romania, which is said to have been part of a larger strategy to improve the efficiency and growth position of its business in Southeast Europe. Bunge also announced the creation of a joint venture with Sinograin, which manages China's central grain and edible oil reserves, to build its fourth soybean processing plant in that nation.​For its second quarter and half-year results, released at the end of July, Bunge reported a 65 percent increase in overall net sales for the quarter ended June 30 2007 to $9.9bn. Net income shot up 460 percent to $168m compared to $30 last year. These results signalled that the firm could be emerging from a tough period that has beset its bottom line.

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