Usina de Acucar Santa Terezinha Ltda., a Brazilian ethanol producer, plans to invest 500 million reais ($283 million) in a mill and sugar-cane plantations as the country seeks to increase its supply of the renewable fuel.

The company expects to build the first phase of a 300 million-real cane project in the center-west state of Mato Grosso do Sul by 2015 and will spend another 200 million reais to develop plantations for its eight existing mills, Sidney Meneguetti, director of Maringa, Brazil-based Santa Terezinha, said today in an e-mail.

Brazil’s government is offering a credit line and drafting other incentives to spur investment in sugar-cane production, which has dwindled since the 2008 financial crisis, Meneguetti said. Ethanol prices reached record highs in April, after supplies ran low during the annual inter-harvest season when mills shut down.

“The government is going in the right direction,” Meneguetti said. “The market is sturdier now than it was three years ago and prices are better.”

The company will start investing this year in the project, which it shelved in 2008, using funds from national development bank Banco Nacional de Desenvolvimento Economico e Social and Fundo Constitucional de Financiamento do Centro-Oeste, a government fund, he said.

BNDES is offering cane producers a 4 billion-real credit line through a program called Prorenova that the government expects to spur the development of 1 million hectares (2.5 million) of fields.

Santa Terezinha may start tapping the line for 160 million reais in April to develop 50,000 hectares, he said.

“Prorenova will play an important role in increasing supply,” Meneguetti said. “Slowly, investment appetite is returning.” He said.

Brazil’s government is planning additional measures aimed at renewing 6.4 million hectares of aging plantations and developing 5.2 million hectares of new fields, the Ministry of Agriculture said Feb. 24 on its website.

source: bloomberg


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