Mubadala Investment Company, Abu Dhabi’s sovereign wealth fund, plans to enter the sugar and ethanol industry in Brazil early next year, and is expected to buck its peers there as it bets on expanding ethanol production and views sugar production as marginal.
Bruno Serpiao, chief executive of Atfus, one of Brazil’s largest sugarcane processing companies, told Reuters late Wednesday that a deal was expected by late this year or early next year for Mubadala’s asset management arm to acquire a 31.5% stake in Atfus.
Mubadala had earlier modified the entry into tender of the Joint Ethanol Production Project (B.P.). B Bang Pio Energia, the world’s third largest sugarcane processing plant.
Several sugar and ethanol companies in Brazil are boosting their sugar production capacity, as they look to take advantage of the historically high prices of sugar. Prices are high due to the small volume of production in some countries. Supply shortages are expected again in 2023-2024.
However, Atphos was looking to boost ethanol production, and corn was likely to be added as a feedstock as most of its plants were located in Brazil’s main cereal belt.
The Chief Executive Officer stated that rising sugar prices were currently unsustainable and ethanol had better prospects over time thanks to the likelihood that most emerging economies would use biofuels as a means of reducing emissions.
“Countries below the equator tend to use biofuels, as there are restrictions on power grids that prevent the adoption of electric vehicles.” “Having an electric car in São Paulo is good, but if you travel 200 kilometers to the countryside, it will be difficult to find a charging station.”
Atphos factories are equipped to produce more fuel than sugar produced by only two of their factories. The company uses 85% of its available sugarcane to produce ethanol. Seven of its factories are located in corn-rich states.
