Brazil's largest sugar co-op turns into a company

SAO PAULO Wed Oct 1, 2008 11:02am EDT

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SAO PAULO Oct 1 (Reuters) - Brazil's largest and most traditional sugar and ethanol cooperative, Copersucar, said on Wednesday it had become a company, with plans to triple its market share in the next 10 years.

Founded in 1959, Copersucar had the aim to sell sugar and ethanol produced by its 10 associate mills. The co-op has expanded its operations and become one of the world's biggest private exporters.

Today it has about 5 percent of the world sugar trade and, with its new legal status, will displace Cosan (CSAN3.SA) as the largest sugar and ethanol producing company in Brazil.

"At the moment, the company does not intend to float shares on an exchange and, once constituted, it will only accept the registration of new shareholders which were also sugar and ethanol producers," Copersucar said in a statement.

The co-op was composed of 33 mills in Sao Paulo, Parana and Minas Gerais states, which now become the shareholders of Copersucar's newly created holding company, Produpar.

The company plans to raise its annual cane crushing capacity to 200 million tonnes by 2018, up from 70 million tonnes this season, and increase its local sugar and ethanol market share to 30 percent in 10 years from 14 percent currently.

The company also intends to buy sugar and ethanol from independent producers to be sold on the domestic and international markets, it said. Turnover from this business, which will reach $200 million this season, is expected to double in 2009/10.

In the current crop, Copersucar expects to sell a total of 4.3 million tonnes of sugar, up 22 percent from the previous season, and 3.8 billion liters of ethanol, up 18 percent.

The company's exports should reach 3 million tonnes of sugar, up 25 percent from 2007/08, and 1 billion liters of ethanol, nearly 50 percent more than last season.

Total sales are forecast to reach 5.7 billion reais ($2.9 billion), compared with 4.5 billion reais in 2007/08 season.

Brazil's booming sugar and ethanol industry has been going through an aggressive consolidation in recent years.

Cane output is expected to roughly double in 10 years but no more than 30 big groups will be in control of production, compared with around 200 currently.

Traditional companies are facing fiercer competition with the arrival of foreign companies and investment funds.

($1 = 1.933 real) (Reporting by Inae Riveras; editing by Reese Ewing; Editing by Walter Bagley)

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