World's top sugar maker shuts large Brazil plant to cut debt
Raizen (RAIZ4.SA), opens new tab, which is controlled by Shell (SHEL.L), opens new tab and Brazilian conglomerate Cosan SA (CSAN3.SA), opens new tab, said that as a result of the plant's closure it had entered into agreements with six sugar companies to sell 3.5 million metric tons of sugarcane that would be processed by the Santa Elisa mill.
It said the sale of that sugarcane would bring in 1.045 billion reais ($188.18 million) that Raizen will use to cut its debt of over 30 billion reais.
The Santa Elisa mill was a historical site for the Brazilian sugar and ethanol industry. The plant was founded 90 years ago in the main sugar belt of Ribeirao Preto, and helped consolidate Brazil's position as the world's largest sugar exporter.
Its past owners were behind the political movement in the 1970s to create Brazil's ethanol program, called Proalcool, in a time when the world was struggling with record high oil prices.
CEISE Br, an association of equipment makers for the sugar and ethanol industry, said the closure of Santa Elisa was worrying for the segment.
"There are concerns about the impact of this action in the industry, particularly regarding ongoing contracts for maintenance, technical support and supply of equipments in the current crop," it said.
Raizen sold one of its plants in May and has offered other assets to competitors in Brazil as it tries to cut debt.
The company's woes happen in a moment of weak sugar prices, with benchmark raw sugar futures on the ICE exchange having hit a four-year low in June.
($1 = 5.5531 reais)
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