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This month's news has a distinct renewable chemistry flavour ...
Where will the world price go? It seems to have stabilised at above 9 ¢/lb and Adeco, a group in the Brazilian industry that is owned by George Soros, is predicting that the world price will stay around 9 to 10 ¢/lb for the rest of this year.
ED+F Man, on the other hand, is predicting a price of only 8 to 8.5 ¢/lb. The basis for its prediction seems to be mainly to do with India selling onto the world market.
Meanwhile Global Commodity Ltd, one of the hedge funds which has been investing in sugar in the recent past, is predicting that the price “may more than double by the end of the year”. The basis of the statement is that crude oil will continue to climb and drive up ethanol and hence sugar prices.
You start to get the scale of the industry in Brazil when you find a headline stating that Odebrecht – just one of many Brazilian engineering companies – intends to invest US$ 2.6 billion over the next decade in order to enter the sugarcane based sugar and ethanol industry. The company is quoted as planning 12 or more factories with a combined capacity of at least 30 to 40 million tons of cane.
Dedini is one of the well known names in the Brazilian industry : it seems to have partnered with Belgium’s Suez-Tractebel energy company to build a new 70 MW bagasse fired power station in Sao Paulo state. The project is reported to have a budget of US$ 80 million.
COSAN is the largest of the Brazilian sugar [and ethanol] companies and therefore presumably the largest in the world. ADM, the world’s largest starch [and ethanol] company has held a ??% shareholding in COSAN for quite some time and it has now indicated that it might want to by the rest of the shares. COSAN’s response has been to file an Initial Public Offering on the New York Stock Exchange. Could be a battle developing here.
The background is even stranger : COSAN has just announced a reduction in profits in excess of 15%.
Following last month’s news item on this domain the situation looked bleak. Maryborough’s talks with the Ord River growers came to nothing with Maryborough stating that the Western Australian Government was not prepared to provide enough support. [The fact that the State’s Development Minister was reported as saying that the Ord River sugar industry was “never going to be profitable” (!) may have been of influence.]
The owners of the factory, Korean sugar company Cheil Jedang, were reported to want Aus$ 7 million for the factory [a good deal for a modern 120 tch factory, albeit with some novel technology]. Western Australia was not prepared to give the farmers more than Aus$ 4 million in support but in the end Cheil Jedang seem to have accepted the 4 million [US$ 3.5 million] and walked away. All seems OK for now, at least for the current crop.
The board of Mulgrave may have rejected Maryborough’s offer [in competition to that from Bundaberg – see the news from the last few months] but Maryborough has coming back with a revised offer. In the meantime the company has raised a war chest of Aus$ 5.8 million with a share placement and is offering further shares to existing shareholders at the placement price.
On another front, Maryborough is bidding for shares in Queensland’s Sugar Terminals Ltd which owns all seven of the state’s export terminals. That is being opposed by Queensland Sugar Ltd which is also bidding for the shares. That is a bit strange when you know that both STL and QSL are owned by the industry as a whole.
The crisis in the Indian industry – a result of a record crop and a return to a more ‘normal’ world price – continues but the government seems to be very willing to help. It has increased its strategic stock from 2 to 5 million tons to take some of the sugar out of the system. The government is also mooting a delay in payment of excise duty for three years – essentially an interest free loan from the government.
In an apparently contrarian move, the [new] state government of Uttar Pradesh has announced that it will scrap the capital incentives [of the previous state government]. However, when you see that the incentives have added something like 180 000 tcd of capacity to the state’s crushing capacity – and hence contributed substantially to the current glut – the wisdom becomes apparent.
Pakistan has a shortage of electrical energy so is re-examining the possibility of export co-generation for its sugarcane industry. There is a potential for 2 GW of installed capacity and a broad brush capital estimate of US$ 1.5 million per MW. What is not mentioned is what auxiliary fuel would be used.
BRITISH SUGAR’S FUEL STRATEGY
As we have reported in the past, British Sugar is already building a bioethanol plant at its Wissington factory. Now, however, it has teamed up with British Petroleum [BP] and DuPont to build a second 420 000 m³/a bioethanol facility at BP Chemical’s Saltend complex on the UK’s North Sea coast. The site will also be used to build a pilot scale biobutanol plant to develop the work that BP and DuPont have been doing in recent times.
DUPONT AND TATE AND LYLE
DuPont also featured in the news with Britain’s’ other sugar company, Tate and Lyle. The two companies officially opened their joint venture renewable resource 1,3-propanediol production plant in Loudon Tennessee last month. The product is sold under the ‘Bio-PDO’ trademark and is used by DuPont to make two specialty polymers.
Last month we reported that Indonesia wanted to invest US$ 5 billion to revitalise its sugar industry. It now seems that it is hoping that at least some of that money will come from the government of Saudi Arabia. Whether that will happen is verse two so watch this space!
DIMETHYLFURAN FOR FUEL
Researchers in the US have discovered a way of making 2,5-dimethylfuran [DMF] from fructose by catalysis. The attraction of DMF is that is has a 40% higher energy density and a higher boiling point than ethanol and is not soluble in water. If the process turns out to be economically viable then we can expect a lot of sucrose isomerisation plants to produce the feedstock fructose.
The Vietnamese industry has often been plagued with a shortage of cane but now one of the millers has taken action by announcing that it will cultivate 2 000 ha - in Cambodia. Bien Hoa Sugar has a factory of 3 500 tcd in Vietnam’s Tay Ninh province and seems to be developing a second factory, some of the cane for which will come from the Cambodian operation.
Prodimex, one of Russia’s major sugar companies, has announced a US$ 250 million investment plan over the next four years in order to upgrade and expand its factories. The company has recently reduced the number of factories that it operates from 21 to 16 but its daily slice will have risen from about 55 000 tsd to 64 000.