Brazil's CJ Selecta plans to open first ethanol mill despite falling demand

CJ CheilJedang

09/04/2020 15:22

By Ana Mano
    SAO PAULO, April 9 (Reuters) - Brazilian soy crusher CJ
Selecta will push ahead with building its first ethanol mill by
year's end, as others in the market steer away from the biofuel
amid slumping demand and low gasoline prices. 
    CJ Selecta, the world's largest maker of feed-grade soy
protein concentrate for the salmon industry, is building the
plant to diversify its products and strengthen sustainability
commitments, Chief Executive Officer Guilherme Tancredi told
Reuters in an interview.    
    "It is a long-term project. The current scenario does not
worry us," Tancredi said about potential issues in the ethanol
market.
    The plant will go ahead despite falling demand. 
    Brazil's top two fuel distributors said last month they
would cut ethanol purchases as consumption falls amid widespread
lockdowns to control the spread of the new coronavirus.
 urn:newsml:reuters.com:*:nL1N2BN1ER Most of the plant's output will be used in CJ
Selecta's own soy crushing plant in the town of Araguari,
reducing fuel costs.
    After a major decline in global fuel prices, analysts expect
Brazilian mills to make a sharp switch from making ethanol to
producing sugar.  urn:newsml:reuters.com:*:nL8N2BD7FZ
    Ethanol prices in São Paulo state had fallen by 38% as of
April 3, as compared to March 6, according to Cepea, an applied
economics center at São Paulo University.
    CJ Selecta's plant will have 12 million liters of annual
production capacity, Tancredi said, and fuel market regulator
ANP approved CJ Selecta to sell surplus ethanol on the open
market.
    According to company estimates, the plant's estimated
surplus output will correspond to less than 0.5% of demand for
ethanol in Minas Gerais state, where CJ Selecta's Araguari plant
is based.
    Tancredi declined to give the size of the investment in the
project and said the decision to build it was made one year ago.
    CJ Selecta - which was acquired by South Korean conglomerate
CJ CheilJedang Corp  097950.KS  in 2017 - produces and exports
more than 300,000 tonnes of feed-grade soy protein per year,
with Europe getting 60% of its exports.
    The company is ratcheting up its sustainability commitments,
also pledging to eliminate purchases of soybeans from the Amazon
rainforest region through 2022, a response to growing concerns
that grain producers could be driving deforestation in Brazil. 
    "These actions will set us apart in the soy supply chain,"
Tancredi said.

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Brazil fuel distributors to cut ethanol buying amid lockdown   
 urn:newsml:reuters.com:*:nL1N2BN1ER
Falling fuel prices, weak currency drive Brazil switch from
ethanol to sugar     urn:newsml:reuters.com:*:nL8N2BD7FZ
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 (Reporting by Ana Mano; Editing by Lisa Shumaker)
 ((ana.mano@thomsonreuters.com; Tel: +55-11-5644-7704; Mob:
+55-119-4470-4529; Reuters Messaging:
ana.mano.thomsonreuters.com@reuters.net))