Cosan and Shell introduce Raízen, their $12B Brazilian ethanol JV
15 February 2011
Royal Dutch Shell and Cosan SA have introduced Raízen, their Brazilian ethanol joint venture. The new company will be one of the top five companies in the country in revenues, with estimated market value of US$12 billion and approximately 40,000 employees. (Earlier post.)
Raízen will be responsible for the production of more than 2.2 billion liters (581 million gallons US) of ethanol per year to supply the domestic and international markets. Apart from ethanol, its current 23 sugarcane mills produce 4 million tons of sugar and have a 900 MW of installed capacity to produce electric power from sugarcane bagasse. In the fuel area, the joint venture will sell approximately 20 billion liters (5.28 billion gallons) of fuels to the Transportation and Industry markets and to its network of more than 4,500 service stations.
Although a new company, Raízen brings the experience of its shareholders. It is a national organization, which benefits from having in its portfolio the products and solutions with the quality of both shareholding companies in addition to the Shell brand in its network of service stations and the aviation segment.
We were born big and we want to be even bigger. Raízen will have the size, talent, resources and technology to meet the needs of our customers, society and shareholders. We want to be recognized globally for our excellence in the development, production and marketing of sustainable energy.—Vasco Dias, Raízen CEO
The process of integrating business units from Shell and Cosan is underway and the company is expected to be launched in the 1st half of 2011.
The name Raízen is the union of the words “root” and “energy” in Portuguese. Raízen will have in its portfolio:
- 23 ethanol plants with approx. 62 million tons per year of sugarcane crushing capacity, with a production of over 2.2 billion liters of ethanol;
- the electricity co-generation projects of the 23 units, of which 12 already have energy sales contracts, with installed capacity of approximately 900 MW;
- fuel distribution assets in Brazil, including around 4,500 service stations, 550 convenience stores and the participation in 53 distribution depots and in the aviation fuel business, with 54 airports;
- participation in an ethanol pipeline company;
- approx. US$1.6 billion of cash inflow;
- Shell’s commercialization rights related to Iogen Energy, a biotechnology firm specializing in cellulosic ethanol; and
- 16.3% share of Codexis, a developer of optimized biocatalysts that make industrial processes faster, cleaner and more efficient.
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