Sojitz’s Brazilian Venture Brenco to Merge
- New Company to Become World’s Largest Ethanol Producer -
Feb. 19, 2010
ETH Bioenergia S.A. (Former ETH), an ethanol and sugar manufacturer and biomass electric power generator of which Sojitz Corporation owns 33.3%, recently reached agreement on a strategic business integration with Brenco Holding S.A. (Brenco), also a bioethanol producer, and concluded agreements with major shareholders.
The new company, which will retain the ETH Bioenergia name (New ETH), will have nine plants in Brazil with the capacity to crush 40 million tons of sugar cane and ethanol production capacity of 3 million kiloliters annually in 2012. The electric power generating capacity using the crushed sugar cane residue (bagasse) will be 2700 gigawatt hours. The New ETH will become the world’s largest sugar cane ethanol producer.
[Map of Bioethanol Plants]
Sojitz and Odebrecht S.A., Sojitz’s Brazilian partner and the 66.7% shareholder of the Former ETH, have agreed on joint ownership of 65% of the post-merger company. Sojitz and Odebrecht will appoint three of the new company’s seven directors, Brenco will appoint three, and the Former ETH will actively manage the new company.
Bioethanol made from sugar cane boasts that highest greenhouse gas reduction effects in terms of energy input and output on a lifecycle basis. Brazil is the world’s largest producer of sugar cane derived bioethanol, and is a highly competitive ethanol producer from the perspectives of streamlining and cost reduction effects achieved through expansion of business scale.
Sales of flexible-fuel vehicles, which can use both ethanol and gasoline and were introduced in Brazil in 2003, are expanding rapidly, and now account for approximately 90% of all new vehicle sales. Brazil’s economy is expected to undergo solid growth in the leadup to the World Cup in 2014 and the Summer Olympics in 2016, and ethanol demand is projected to increase by 7% annually.
The New ETH will invest 3.5 billion reals (approximately 175 billion yen) to expand production facilities. The company is also contemplating exports to Europe and the United States, where demand for ethanol is rising, and is considering spending 1.7 billion reals (approximately 85 billion yen) to expand markets and raise price competitiveness by constructing a large ethanol pipeline spanning the approximately 1,100 kilometers from the production regions to the Sao Paolo Santo Port for exporting.
Sojitz has positioned environmental and new energy businesses as top-priority fields, and is committed to expanding raw material production, manufacturing, and sales of sugar cane derived ethanol from the perspective of development and securing new renewable and sustainable sources of energy to address global environmental issues.
[The Eldorado Plant in Mato Grosso do Sul]
Overview of the New Company
|Name||ETH Bioenergia S.A.|
|Shareholders||ETH Investimentos S.A. (a joint venture of Odebrecht and Sojitz: 65%
Brenco Holding S.A. shareholders: 35%
|Business activities||Sugar cane cultivation, bioethanol manufacturing and sale, sugar manufacturing and sale, biomass electric power generation and sale, bioethanol technology research and development, bioethanol distribution network development (pipeline project planning) , etc.|
|Production capacity (in 2012)||Sugar cane crushing: 40 million tons/year
Ethanol with and without water: 3 million kiloliters/year
Sugar: 480,000 tons/year
Electric power: 27,00 gigawatt hours
Overview of ETH
|Name||ETH Bioenergia S.A.|
|Head office||Sao Paolo, Brazil|
|Representative||Jose Carlos Grubisich|
|Capital||1.01 billion real
(approximately 53.3 billion yen; as of end of December 2009)
Overview of Brenco Holding
|Name||Brenco Holding S.A.|
|Representative||Henri Philippe Reichshtul|
|Capital||650 million real
(approximately 34.4 billion yen; as of end of December 2009)
Overview of Odebrecht
|Head office||Bahia, Brazil|
|Capital||2.6 billion real (approximately 138 billion yen; as of end of June 2009)|
|Description||Brazil’s largest conglomerate.Under in the corporate group are Construtora Norberto Odebrecht S.A., South America’s largest general consruction firm, and Braskem S.A., South America’s largest petrochemical company.|