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Cosan and Shell introduce Raízen, their $12B Brazilian ethanol JV

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.

Comments

kelly

Brazil can continue meeting it's needs with renew-ables while getting it's new deep offshore oil discoveries ready for the multi-hundred/barrel post peak gouging to come.

Roger in Spain

Good one. How can you and I cash in on the peak gouging?

HarveyD

Brazil is one of the few countries of the world with enough surplus farm lands to produce most of the liquid fuels it consumes.

What effect will it have on sugar price? We eat too much sugar anyway.

What will happen when vehicles are electrified in 2030/2040?

nordic

The article gives no information on the overall carbon footprint and I'd be curious about this. RE:: Their claim "we were born big" their fuel output 5.28 billion liters is about 1/4 of Brazils annual production, 21 billion liters see: http://www.oecd.org/document/2/0,3343,en_2649_201185_38893378_1_1_1_1,00.html

CelsoS

Nordic,

I don't have much time now, but there are some papers and presentations you can download in English from the site of UNICA, the "Brazilian Sugarcane Industry Association".

You can also Google for "Jose Goldemberg"+Ethanol. He is a well known widely respected scientist with some papers (and action) on the field.

    (i.e. http://iopscience.iop.org/1748-9326/1/1/014008/pdf/erl6_1_014008.pdf)

Carbon footprint is very low. Sugarcane is a perennial, it "builds itself", collects 3% mean, 6% max of incident light energy. Process energy is derived from lignocellulosic excess biomass (bagasse) in CHP setups producing heat and electricity. Excess electricity is sold to the grid displacing NG termo generators. They use "Biological Fixation of Nitrogen" with symbiotic microorganisms doing the job instead of fossil derived additions. Mechanization of harvest with no fire/burning is underway. Etc.

    from the PDF at http://english.unica.com.br/download.asp?mmdCode=7FB6A6F9-244A-4FCF-8879-C470BB4F9CCC :

    "Unmatched GHG Reduction Several well-to-wheel estimates show that Brazilian sugarcane ethanol reduces emissions of greenhouse
    gases (GHG) by up to 90%, when used instead of gasoline."

Main concerns are scalability to global demand, use of land and water, monoculture x biodiversity. Not really a problem today, neither with our predicted growth.

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