Indofood to Buy Half of Brazil Sugar-Cane Mill as Market Expands

Indofood Agri Resources Ltd. (IFAR), a Singaporean agriculture company, plans to acquire a 50 percent stake in the Brazilian sugar-cane processor Cia. Mineira de Acucar e Alcool Participacoes as the South American nation prepares to boost domestic consumption of ethanol.

Indofood will pay 143.4 million reais ($72 million) for the stake in CMAA, which owns a mill in the municipality of Uberaba capable of processing 3 million metric tons of cane a year, according to a stock filing with the Singapore stock exchange.

Brazil will raise in June the rate for blending ethanol with gasoline to 25 percent from 20 percent. That will increase annual demand for the renewable fuel by 1.9 billion liters (500 million gallons), according to Salim Morsy, an analyst at Bloomberg New Energy Finance’s Sao Paulo office.

“Mills will have a broader domestic market,” Morsy said today in an interview.

The deal is expected to close in the second quarter, Indofood said in the Jan. 28 filing. CMAA’s mill produces sugar and ethanol, as well as electricity from burning crop residues, and its annual capacity may eventually be expanded to 3.8 million tons.

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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