Archer-Daniels-Midland Co. agreed to sell its sole ethanol plant in Brazil, ending an eight-year involvement in the country's market for the alternative fuel after deciding that the asset was too small.
The factory and a sugar-cane plantation in Limeira do Oeste, Minas Gerais state, will be sold to JFLim Participacoes, Chicago-based ADM said late last week. JFLim is a holding company focused on cane, sugar and ethanol, ADM spokesman Jackie Anderson said. No terms were given for the transaction.
With capacity to crush 1.5 million tons of cane and produce 37,000 gallons of ethanol per year, the plant is "too small for ADM to compete effectively in a challenging ethanol environment," said Chris Cuddy, the president of ADM's corn-processing unit. The operation was unlikely to meet long-term objectives for returns on investment, he said.
While ADM is the biggest U.S. ethanol producer, it's a minnow in Brazil. Raizen SA, the Latin American country's largest sugar and ethanol producer, operates 24 mills with the combined capacity to crush more than 60 million tons of cane annually.
Archer-Daniels-Midland bought its initial stake in the plant in 2008, during a boom in investments in Brazil's ethanol sector. Since then, Brazilian producers have struggled, with the government capping fuel prices as part of efforts to keep inflation under control. About 50 ethanol and sugar mills have closed and 70 have filed for bankruptcy in the country since 2011, according to the industry group Unica.
SundayMonday Business on 04/10/2016