IFC invests in Brazilian ethanol producer

The funding will go into expanding CerradinhoBio's production capacity for sugar ethanol and bio-based electricity.

The International Finance Corporation, the investment arm of the World Bank, has committed 150 million reais ($47 million; €41 million) to an ethanol and biomass-based electricity production project in Brazil.

Located in the largely agri-dependent Goias region, CerradinhoBio will use the funding to increase its production of sugar ethanol by 28 percent and double its capacity to generate electricity. The company uses bagasse, a byproduct of ethanol production, to generate energy for its own operations and for export to the national  grid.

The investment supports the IFC’s mandate to promote economic development and reduce poverty, said Luiz Daniel de Campos, principal investment officer for the group’s agribusiness department in Brazil.

“Agribusiness is a strategic priority for IFC because of its potential for development and poverty reduction,” said de Campos in a statement.

“We are pleased that our support to CerradinhoBio will also help enhance sustainability standards in the industry as well as support the growth of renewable energy initiatives in Brazil.”

Interest from private investors in the ethanol sector has been tepid for years, industry experts have told Agri Investor. After a period of strong growth in the 2000s, producers have been challenged by overbuilt capacity and high input costs during a spike in commodity food prices, followed by a crash in oil prices.

However, Summit Agriculture raised $115 million in April for a corn ethanol project to supply areas of Mato Grosso geographically isolated from sugar ethanol and petroleum suppliers. JFLim Participações announced it had purchased the Brazilian sugarcane operations of Archer Daniels Midland, also in April.

Other groups with exposure to Brazilian ethanol production include Performa Investments, DGF Investimentos and Neuberger Berman.