SAO PAULO, Brazil — Anglo-Dutch energy titan Shell and Brazilian sugar-production group Cosan said Monday they were forming a joint ethanol fuel venture with an estimated market value of $12 billion.
A peasant cuts sugar cane with his machete in the
Usina Bonfim farm plantation in Guariba
The new entity, to be called Raizen, would be one of the biggest players in the sector worldwide, employing around 40,000 people and producing over 2.2 billion liters (580 million gallons) of ethanol per year to Brazilian and international markets, the two companies said in a statement.
Raizen should be launched in the first half of this year, they said.
"Due to the size of its operations, Raizen will help sugarcane ethanol, a sustainable, clean and renewable source of energy, to consolidate itself worldwide and strengthen Brazil's position in the international biofuels trading business," said the venture's chief executive, Vasco Dias.
Raizen will have 23 mills able to crush 62 million tonnes of sugarcane per year to produce the ethanol. The mills will also output four million tonnes of sugar per year.
The venture will distribute some of the product in 4,500 service stations across Brazil, and through participation in distribution depots for aviation fuel in 54 airports.
The statement said the new company would have approximately $1.6 billion in cash inflow.
"We want to be even bigger," Dias said. "We want to be recognized globally for our excellence in the development, production and marketing of sustainable energy."
The European Commission gave the green light last month to form the new joint venture.
Brazil is the second-biggest producer of ethanol in the world, after the United States, and the biggest exporter of the biofuel.
It sustains a large domestic market using ethanol through the sales of cars whose engines can take either gasoline, ethanol or a mix of the two.