Brazilian sugarcane mills for foreign investors
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Transcript of Brazilian sugarcane mills for foreign investors
Orlando González
Ricardo Pinto
January/2012
THE FIFTH LARGEST COUNTRY IN THE WORLD 3.3 X 106 square milles
BRAZIL COVERS 47% OF SOUTH AMERICA
FEDERATION WITH 26 STATES , 5 REGIONS
BRASILIA IS THE NATIONAL CAPITAL
POPULATION : 191 MILLION
Sources: USDA and MAPA
2009 RANKING: BRAZILIAN PRODUCTION AND EXPORTS
Exports
US$ Billion
Sugar 1st
1st 124 8.378
Coffee 1st
1st 81 3.762
Orange Juice 1st
1st 75 1.619
Soybeans 2nd
2nd 46 11.413
Beef 2nd
1st 142 4.118
Tobacco 2nd
1st 100 2.992
Ethanol 2nd
1st 48 1.338
Broiler 3rd
1st 146 5.307
Corn 4th
3rd 49 1.259
Pork 4th
4th 81 1.225
Main Products Production ExportsNumber of
Markets
AGRICULTURAL PRODUCTION INDEX: 1992-2019
FAO-OCDE Projections
19
“Brazil is the fastest growing agricultural sector by far, growing by over 40% to 2019, when compared to the 2007-09 base period.”
(OECD-FAO Agricultural Outlook 2010-2019)
Source: Ministry of Agriculture, Brazilian Institution of Geography and Statistics (pastures – 2006)
AGRICULTURE AREA 2007/2008 HARVEST
Most of recent
expansion in agricultural
area is on pasture land
BRAZILIAN AGRIBUSINESS EXPORTS MAIN PRODUCTS – 2010*
Source: Ministry of Development, Industry and External Commerce. 2009
Elaboration: Ministry of Agriculture 21
Total: US$ 73.9 billion * From November 2009 to October 2010
BRAZILIAN AGRIBUSINESS EXPORTS MAIN DESTINATIONS – 2010*
Source: Ministry of Development, Industry and External Commerce. 2009
Elaboration: Ministry of Agriculture 22
* From November 2009 to October 2010
Total: US$ 73.9 billion
BRAZILIAN AGRIBUSINESS
COMPETITIVE ADVANTAGES
Strong, thriving economy & Institutional framework
Leadership in tropical technology
Natural resources abundance (land, water, solar energy)
Farming vocation & Business entrepreneurship
21.042
18.778
12.902
20.265 21.522 22.231
33.705
43.886
30.444
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
2001 2002 2003 2004 2005 2006 2007 2008 2009
US
$ m
illi
on
24
EVOLUTION OF FOREIGN DIRECT INVESTMENTS
IN BRAZIL (2001 – 2009)
Netherlands 17,1%
USA 16,5%
Spain 8,7%
Luxemburg 8,6%
Japan 5,8%
France 5,7%
Germany 4,9%
Cayman Islands
3,9%
Canada 3,4%
Others 25,4%
FOREIGN DIRECT INVESTMENTS By origin - average 2007-2009
25
Millions of hectares
% Brazil % arable land Brazil 851.4
Total arable land 329.9
1. Total crop land 59.8 7.0% 18.1%
Soybean 21.6 2.5% 6.4%
Corn 14.4 1.7% 4.4%
Sugarcane 8.1 0.9% 2.5%
Sugarcane for ethanol 4.8 0.6% 1.5%
2. Pastures 158.7 18.6% 48.1%
3. Protected areas and native vegetation 495.6 58.2% -
4. Available area 137.2 16.1% -
Note: Arable land (Censo IBGE 2006) 1) Total permanent and temporary crops (Censo IBGE 2006); Data for soybean, corn and sugarcane (IBGE 2008). 2) Pastures (Censo IBGE
2006 3) Protected areas and native vegetation (Gerd Spavorek 2009, not published) APP = Permanent Preservation Area; UC = Conservation Units and TI = Indigenous lands 4)
Available area = arable land – Crop – Pastures. Source: ICONE and UNICA.
Source: UNICA
Source: UNICA and MAPA, 2009/2010 is estimated data. Production growth
is calculated by 2008/2009 over 2000/2001
Source: Anfavea
Industry revenue > US$ 50 billion (2010)
Foreign revenue (exports) US$ 13.8 billion (2010)
Direct investments > US$ 20 billion (2006-2009)
Composition 428 plants nationwide (2011)
Sugarcane growers 70,000 (2010)
People directly employed 845,000 (2009)
Share of Brazilian energy use 18.1%, ahead of hydroelectricity
Avoided CO2 emissions > 600 million tons since 1975
Source: UNICA
Petroleum and derivatives
37,9%
Sugarcane
18,1%Hydroelectricity
15,2%
Wood and other biomass
10,1%
Natural Gas8,8%
Coal4,8%
Other renewable sources
3,8% Uranium1,4%
Source: BEN (2010). Elaboration: UNICA
Jan, 2003 Feb, 2010
Accumulated sales
of flex-fuel vehicles
Source: ANP and ANFAVEA. Elaboration: UNICA
FLEX-FUEL ALREADY REPRESENT ALMOST 40% OF THE TOTAL BRAZILIAN FLEET (OTTO-CYCLE), EXPANDING
THE DEMAND
Brazilian-made crop
dusting planes running
on ethanol
Ethanol-powered
buses (E95) - still a
pilot project in Brazil
Flex-fuel
motorcycles
Production of diesel from
sugarcane at commercial
scale by 2010
Biobutanol
Production of bioplastics
ETHANOL USE ISN’T LIMITED TO CARS…
One of the biggest sugarcane groups in Brazil (unlisted company).
They have 13 units in 4 states.
Their sugarcane crushing capacity is about 38 million tons per year from 450,000 hectares.
Their annual production capacity is:
◦ 2.75 million tons of sugar,
◦ 1.53 billion liters of ethanol,
◦ 1 GWh of cogeneration.
They prefer to sell part of the company, but maintaining the control, in order to grow more.
Problable enterprise value: US$ 4.94 billion.
Important group in São Paulo State.
They have 2 units working and 1 greenfield to be built (with environmental licenses).
Their sugarcane crushing capacity is about 7.6 million tons per year.
Their production capacity is:
◦ 700 thousand tons of sugar,
◦ 140 million liters of ethanol,
◦ 115 MWh of cogeneration.
They have to be sold entirely.
Problable enterprise value: US$ 1.12 billion.
Unique mill in Mato Grosso do Sul State.
The mill had its first crushing this year (2011)
It can crush 1,0 million tons of cane per year now.
Their production capacity is:
◦ 90 million liters of ethanol.
They have to be sold entirely.
Problable enterprise value: US$ 110 million.
There is one in Mato Grosso do Sul State.
The price to buy the greenfield, including industrial area, environmental licences and business plan, is about US$ 20 million.
The Total CapEx for a 3 million tons per year mill will be around US$ 475 million.
In a greenfield, the production mix for sugar and/or ethanol could be defined as you want.
The first crushing season (1 million tons of sugarcane) will be after 3 years. Then, in the second crushing period, the mill will crush 2 million tons and, finally, in the third year, it will crush 3 million tons of sugarcane.