Oil companies take over 8.3% of sugarcane crushing
Valor Econômico
Oil producing companies continue advancing in the Brazilian sugar and alcohol segment. Together, Shell, Petrobras and BP - which announced on Friday the purchase of 83% of the CNAA (Companhia Nacional de Açúcar e Álcool, or National Company of Sugar and Alcohol) - already have capacity to crush nearly 50 million tons of sugarcane, not including the ongoing expansion plans. The volume represents 8.3% of the processing of sugar cane for the 2011/12 harvest, which should repeat the 600 million tons of the prior harvest - when the participation of the oil companies stayed at nearly 7.5%, already considering the entrance of Shell in Cosan, whose agreement was wrapped up only in February this year.
BP effectively entered in biofuels in Brazil in 2008 with the purchase of 50% of the plant Tropical, of Edéia (State of Goiás), currently with the crushing of 2.5 million tons of sugarcane. The duplication is under negotiation with the other partners, Brasil Ecodiesel and Louis Dreyfus, each with 25%. The agreement for the purchase of the CNAA will increase the participation of BP in the segment from 1.2 million tons of sugarcane to 5.2 million. The plan, according to Mario Lindenhayn, President of BP Biofuels in Brazil, is to increase to 15 million tons the crushing capacity of the three plants of the CNAA, two already in operation in Goiás and Minas Gerais and one Greenfield project. That not to mention the fourth area already acquired by the CNAA in the same cluster, and that is the target of study for the construction of another plant. To buy the 83% of the CNAA, BP will pay US$ 680 million in total to a pool of investment funds among which are Riverstone and Goldman Sachs. Part of that amount will come as assumption of debts, which will be elongated. That value was not informed, but the balance of the CNAA shows that the debts with the banks were at R$ 611 million (US$ 359.4 million) in 2009.
In an interview to Valor, Lindenhayn did not speak of goals or future investments. But he said the company will be one of the most relevant players of Brazil in the sector. "Relevant means something above 50 million tons", he said. But, currently, the one ahead among the oil companies is really the British-Dutch company. With 49% of the sugar and alcohol business of Cosan, the equivalent to a processing capacity of 30 million tons of sugarcane, Shell, its partner in Raízen, comes with the cash leave the 62 million tons of sugarcane crushing capacity to 100 million tons in the coming years, which would increase the domain of Shell to something at near 50 million tons of capacity.
Petrobras has three different partners originally from the sector. The plant Total, from Bambuí (MG), which is in process of duplication from 2 million to 3 million tons of crushing capacity. Also Guarani, with nearly 20 million tons and which the State-company agreed to the participation of 45% after a cycle of ongoing investment. And Nova Fronteira, in the Midwest, with the São Martinho group, a project that has only 2.5 million tons of effective capacity, but a project to grow, only with the current plant (Boa Vista), to 7 million tons.
The appetite of the oil companies - and of other multinationals - for bioenergy is real and it promises to increase the disputes for the plants in the coming months. The market believes that in the end, the purchase of the CNAA may have cost between US$ 120 million and US$ 130 million per ton of installed capacity. "Anyone who thinks the value was high might be surprised, because the tendency is that the prices of the assets go up. The giants have already gone through the phase of digestion of assets and will come hungry for the fight", says an expert on mergers in the sector.