Glencore may buy Brazil ethanol plant stake-report

RIO DE JANEIRO Oct 18 (Reuters) - Commodities trader Glencore is in talks to buy a 70 percent stake in Brazilian sugar and ethanol plant Rio Vermelho for around $80 million, a Brazilian newspaper reported on Monday, without saying where it got the information.

That purchase would mark Glencore's first entrance into Brazil's sugar and ethanol sector, business daily Valor Economico said.

The Rio Vermelho plant currently has capacity to crush 1.2 million to 1.3 million tonnes of sugar cane per season, the paper said.

New investments from Glencore would let Rio Vermelho, which is currently focused on selling ethanol to Brazil's domestic market, boost output of sugar and generation of electricity from cane bagasse, according to the report.

A Rio Vermehlo representative said she could not immediately comment on the matter.

The Glencore office in Sao Paulo had no immediate response to Reuters' request for additional information on the report.

Brazil's sugar cane industry has been undergoing consolidation over the past few years. Mergers and acquisitions have accelerated after the global financial crisis.

Many milling groups, which had over leveraged their expansion plans, were caught off-guard by the tighter credit markets. This created a good number of distressed assets in a sector that had been previously considered overvalued.

Foreign capital makes up about 20 percent of Brazil's cane ethanol industry.

source: reuters