SAO PAULO (Dow Jones)--Young bioenergy company Clean Energy Brazil PLC (CEB.LN) has plans to invest up to 500 million Brazilian reals ($266 million) in two new ethanol- and sugar-producing mills in the center-south Brazilian states of Mato Grosso do Sul and Goias, local Valor Economico newspaper reported Friday.
The company is planning to construct one of these new mills in the city of Sidrolandia in Mato Grosso do Sul, with operations set to start in the 2009-10 harvest. The other mill, located in the city of Santa Fe in Goias, should start crushing cane in the 2010-11 harvest.
The initial cane crush of each of these mills is pegged at 1.5 million metric tons of cane per harvest, Valor said.
Brazil, the world's leading ethanol exporter, has lured a heady amount of investors to its booming sugarcane sector in the past year and a half, including agribusiness giants like Cargill and Archer Daniels Midland (ADM), as well as billionaire venture capitalists Vinod Khosla and George Soros.
In December of last year, CEB raised 100 million pounds in an initial public offering on the London Stock Exchange's junior market AIM to invest in Brazil's sugar and ethanol sector.
Earlier this year, CEB announced its first investment of roughly $137 million for a 49% minority stake in a key milling group in southern Parana state, Usaciga, with one existing mill and two greenfield projects located in Parana and Mato Grosso do Sul.
Once Usaciga's greenfield projects hit full capacity in 2013-14, the group is set to have a cane-crushing capacity of about 7 million metric tons of cane per harvest, according to CEB's Web site.
CEB's avowed target is to hit a cane-crushing capacity of 30 million metric tons per harvest in coming years.
The company is looking to invest in five other milling groups in the country, though the rhythm and success of this plan will depend on the appetite of international investors in financing CEB via capital markets, Valor said.
In addition, prices for existing mills remain steep due to intense competition from other buyers despite slumping global sugar and ethanol prices this season.
Brazil is the world's No. 2 ethanol producer after the U.S. It is also the world's top sugar producer and exporter.
Source: Grace Fan, Dow Jones Newswires; 5511 3145 1489; brazil@dowjones.com