(Adds details on mills, context on next cane season)
By José Roberto Gomes and Marcelo Teixeira
SAO PAULO, Nov 14 (Reuters) - Brazil’s Raízen, the world’s largest sugar maker, will idle two mills in the main Sao Paulo cane belt for an initial period of two years, saying there will not be enough cane in the area where the plants are located to justify operations.
Raízen, a 50-50 joint venture between Brazil’s Cosan SA Indústria e Comércio and Royal Dutch Shell Plc , said in a statement on Tuesday that it will transport the cane planted in the areas where the mills are located to other plants it operates in the country.
The company, which is also Brazil’s largest ethanol producer and the second largest fuel distributor, said it will shut the Dois Córregos mill, namesake of the municipality where it is located, and the Tamoio mill, in Araraquara, both situated in central Sao Paulo state.
In both cases, the installations being shut are not far away from other plants Raízen has. Dois Córregos is close to Diamante and Barra Bonita mills. Tamoio is near the Araraquara and Serra plants.
“The idling is due to an outlook of reduced sugarcane supplies in those regions and follows a strategy to optimize logistics and production,” Raízen said.
The company did not disclose the crushing capacity or other production details from the plants that are being shut.
Raízen’s decision happens days after its largest rival in Brazil, Biosev, the sugar unit controlled by commodities trader Louis Dreyfus, announced the closure of a mill in Mato Grosso do Sul state.
The current crop marks the third consecutive fall in cane production for Brazil’s center-south, the world’s largest sugar producing region, as mills struggle to invest in cane fields amid low sugar prices.
The region is expected to crush a crop next year similar in size to the one processed this year, at around 580 million tonnes.
But other regions in the world such as Thailand, Europe and India have increased sugar production, leading the global market to a supply surplus that pressures prices. (Editing by Chizu Nomiyama and Marguerita Choy)