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The American agricultural trader Bunge and the British group of the energy sector, BP, have agreed to create a joint venture in the sugar cane ethanol sector in Brazil, announced Monday the two companies .
BP will badociate its Brazilian biofuel and biopower companies with those of Bunge. The autonomous entity, BP Bunge Bioenergia, will have 11 biofuel production plants in Brazil, with a crushing capacity of 32 million tons per year. It will produce both ethanol and sugar.
Bunge said she would receive a cash proceeds of $ 775 million as part of the deal. BP will pay $ 75 million to the trader and the joint venture will incur a $ 700 million non-recourse debt related to Bunge's badets.
Bunge's new chief executive, Gregory Heckman, said the deal "allows us to reduce our current exposure to the sugar mill, strengthen our balance sheet and focus on our core businesses."
Instead, the company has focused on grains, oilseeds and food ingredients. Last year, Bunge ceased operations in the sugar sector, but was forced to suspend an initial public offering of its Brazilian candy business due to lack of investor interest.
Bunge bet over $ 1 billion on demand for sugar and fuel ethanol in 2010, when it acquired Moema, a Brazilian refinery operator. But the investment has run into difficulties due to the deterioration of cane harvests due to bad weather conditions, lower sugar prices and lower gasoline prices, a fuel competing with ethanol from sugarcane. Bunge first announced its intention to explore a sale of the factories at a loss four years ago.
At the same time, some of the world's largest oil and gas companies are trying to increase their production of more environmentally friendly liquid fuels, as they rely on the constant demand for fuel fuels, particularly for transportation such as fuel and gas. heavy trucks and planes.
"Biofuels will be an essential part of the energy transition," said Bob Dudley, CEO of BP. "Brazil is showing the way to use them on a large scale, reducing transport emissions."
The joint venture, headquartered in Sao Paulo, will also produce renewable electricity generated by the residual biombad of sugar cane to supply the sites with any surplus sold to the Brazilian grid.
In 2018, BP and Bunge's operations produced approximately 2.2 billion liters of ethanol equivalent. Both entities employ more than 10,000 people in Brazil.
Biofuels generate carbon emissions similar to fossil fuels during combustion. But they are considered more environmentally friendly because they are produced from organic materials that absorbed carbon dioxide from the atmosphere.
Today, biofuels are typically consumed by mixing small amounts with traditional stocks of liquid fossil fuels.
The transaction is expected to close in the fourth quarter of 2019.
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