Brazilian
ethanol boom draws prominent investors
Trinidad Express
RIO
DE JANEIRO, Brazil
Petroleumworldtt.com
03 25 07
A new ethanol company with prominent foreign investors
took a big step last week toward starting operations
in Brazil, announcing the private placement of US$200
million (US$151 million) in common shares.
Brazilian
Renewable Energy Company Ltd's founding shareholders
include venture capitalist Vinod Khosla, American
supermarket magnate Ron Burkle, America Online founder
Steve Case, former World Bank President James Wolfensohn
and film producer Steven Bing, the company said
in a statement.
The
company will be overseen by Philippe Reichstul,
a former chief executive of Petroleos Brasileiro
SA, Brazil's government-run oil company. Brazilian
investors include Tarpon All Equities LLC and Grupo
Semco.
Brenco
plans to sell ethanol to the huge domestic market,
and export it amid rising international demand.
Press officer Thais Franco did not specify which
overseas markets will be targeted, and could not
confirm reports that the company hopes to produce
3.8 billion liters (1 billion gallons) annually
within the next 10 years.
Brazilian
ethanol makers produced 17 billion liters (4.5 billion
gallons) last year, and exported 3.4 billion liters
(900 million gallons).
The
company is incorporated in Bermuda with headquarters
in Brazil's largest city of Sao Paulo, near the
sugarcane fields where most Brazilian ethanol is
produced.
Brazilian
President Luiz Inacio Lula da Silva and US President
George W. Bush recently signed an accord to promote
ethanol use internationally and boost production
in nations between Brazil and the United States.
The
United States is the world's largest ethanol producer;
Brazil is No. 2, but is the biggest exporter and
has ample land available to boost production.
Brazilian
ethanol is made from sugar, which is significantly
cheaper than production of the fuel from corn, the
raw material in the United States.
Global
interest in Brazil's cheap cane-based ethanol has
boomed over the last year due to persistently high
world oil prices and growing climate change concerns,
among other factors.
But
some Brazilian investors say ethanol distilleries
are already overpriced.
Cosan
SA, Brazil's largest ethanol producer and the world's
second largest after the US-based Archer Daniels
Midland Co., said it wasn't planning any other new
acquisitions.
"The
market is quite heated up in terms of prices,"
Paulo Diniz, the company's vice president of finances,
said during a conference call last Friday.
"Acquisitions
have always been central for our growth," he
said, but added that current prices are making the
company rethink its strategy.
Eight
out of every 10 new cars sold in Brazil are "flex-fuel"
models that run on pure ethanol, gasoline or any
combination of the two. Ethanol is nearly half the
price of gasoline at the pumps in Brazil.
Trinidad
Express
Wednesday, March 21st 2007
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©2007 Trinidad Express. All Rights Reserved.
