On 5 November a Brazilian firm, Copersucar SA, and a US company,
Eco-Energy announced that they had agreed on a deal to merge their international operations in order to create the world’s leading ethanol trading company, which is to be controlled by Copersucar. A Copersucar statement explained that the two firms had agreed to embark on a joint venture to strengthen and expand Eco-Energy’s ethanol production. Eco-Energy already is a leading biofuel trader in North America , while Corpesucar is the world’s second largest sugar producer and Brazil’s largest sugar and ethanol trader; it is expected that the partnership will suit both as it will allow Eco-energy to become the leading ethanol provider for the US market, while Corpesucar will be able to its business to North America.
A Copersucar executive, Luis Roberto Pogetti, explained that since the Brazilian firm has agreed to provide the majority of the funding, it will have the control of the new venture - though he failed to provide further details as to how the partnership will be divided. Pogetti said the new company will have a combined net biofuel production potential of 10bn litres a year, which will allow it to control 12% of the global biofuel market. The venture would allow the firms to take full advantage of this growing market and of the possibility of developing a new global supply chain, in particular in relation to ethanol.
“With the partnership, Copersucar becomes a truly global company in the biofuels market market, expanding the scale of its operations to the two main ethanol markets in the world, which are the US and Brazil, both in production and consumption volume”, Pogetti stated. He added that currently, Eco-Energy supplies many of the biofuels that oil refineries in the US must, by law, mix-in with their products. “Eco-Energy offers the full biofuel package and Copersucar is to be the provider of sugar-cane ethanol in this package”. Similarly Eco-Energy’s president, Chad Martin, said that “the biofuels industry extends far beyond North America and we need to work towards opening new markets”. Martin pointed out that the two firms “have a similar business model and a comparable view on global growth”, which would make the partnership a success.xx Since its creation in 2008, Corpesucar has managed to obtain the exclusive rights to sell the sugar and ethanol produced in 48 plants in the Brazilian states of São Paulo, Goiás, Paraná and Minas Gerais, as well as help 50 other associate plants distribute their excess production. This has allowed it to, in effect, control 24% of the Brazilian ethanol and sugar market, with yearly sales of US$7.5bn. Meanwhile, Eco-Energy currently accounts for 9% of the US ethanol market, with annual sales of US$3bn. The firms said that they initially plan to invest U$25m in infrastructure development, which they hope will help them increase their ethanol supply potential to 18bn litres a year by 2016.