(Corrects second and third paragraphs to clarify the assets that will be sold while the mill will cease operating)
* Biosev trying to improve installed capacity at mills
* Brazil's second-largest milling group canceled IPO
By Fabiola Gomes
SAO PAULO, Dec 17 Biosev, the Brazilian sugar and ethanol unit of global commodities company Louis Dreyfus Corp said on Monday it is selling assets at its São Carlos plant to the São Martinho milling group for 200 million reais ($95.51 million).
The sale by Biosev, Brazil's second-largest milling group after Cosan, i ncludes t he sugar cane plantations, a sugar warehouse and other agricultural assets in Ja boticabal in the interior of São Paulo state, b ut not the sugar cane mill itself. The mill will stop operating and its workers will be transferred to other Biosev units, a company statement said.
The sale includes all the cane supply agreements for the San Carlos mill, while São Martinho agreed to supply Biosev with one million tonnes of sugar cane in the first year.
Biosev's president said the company is trying to raise installed capacity at its existing mills at a difficult time for Brazil's sugar industry.
"We are trying to improve efficiency by selling assets that were not aligned with our strategy," Biosev President Christophe Akli told Reuters in a phone interview.
The company aims to increase installed capacity at its plants to 8 3 percent by the 2013/14 harvest, he said. In 2011/12 installed capacity was 70 percent after a weak sugar cane harvest in the world's largest producer of the sweetener.
The São Carlos mill that is being sold can crush 1.85 million tonnes of sugar cane per year, compared with the average of 3.1 million tonnes per year at Biosev's other plants.
Brazil's milling industry has been extremely fragile in recent years, with some 30 mills closing in the past year and a half. Biosev itself scrapped its plans for an initial public offering in August, citing growing market uncertainty locally and overseas. and
French company Louis Dreyfus was one of the first multinational groups to enter Brazil's cane sector, when it snapped up the ailing Santelisa Vale milling group in 2009 and renamed it Biosev.
($1 = 2.0941 Brazilian reais) (Writing by Caroline Stauffer; Editing by Bob Burgdorfer)