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| USJ |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26135 |
| Company name | USJ Acucar e Alcool S.A. |
| Country | Brazil |
| Sector | Agriculture and Forestry |
| Environmental category | B |
| Department | Agribusiness |
| Status | Pending Disbursement |
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| Date SPI disclosed | January 22, 2008 |
| Projected board date | February 22, 2008 |
| Previous Events | Signed: March 27, 2008
Approved: March 27, 2008 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
USJ (USJ or the company) has a three-year investment program which began in Fiscal Year (FY) 2007 and will end in FY2009 to build and expand two sugar and ethanol mills in Goias. The investment program will increase USJ’s sugar cane crushing capacity from 5.5 to 10 million mt (metric tons) per year, with most of the expansion in sugar cane supply coming from small and medium farmers in the state of Goias that currently farm lower return crops. The investment program includes:
- doubling capacity at its Quirinopolis mill (Goias) from 2.25 to 4.5 million mt,
- building a 2.25 million mt greenfield mill in Cachoeira Dourada (Goias),
- increasing electricity co-generation capacity from sugarcane bagasse by 58MW,
- the purchase of farm equipment,
- planting 25,100 hectares of cane on own and rented land, and
- additional working capital. |
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| Project sponsor and major shareholders of project company |
| The company was founded in 1941 by the Ometto family and it established a sugarcane mill to produce sugar and ethanol in Araras – State of Sao Paulo in 1944. USJ is a privately held company, and still controlled by members of the Ometto. The key managers are fourth generation members of the family, including the CEO Herminio Ometto Neto, and the CFO Maria Carolina Ometto Fontanari. |
| Total project cost and amount and nature of IFC's investment |
Total project cost amounts approximately $355 million. The project began in FY2007 and will end in FY2009.
IFC’s investment would consist of an A-Loan of up to $40 million for IFC’s own account. |
| Location of project and description of site |
| Two mills are located around the municipalities of Quirinopolis, and Cachoeira Dourada, in the south of the state of Goias. The company is headquartered in Araras, in the state of Sao Paulo. |
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| Anticipated development impact of the project |
The project will support the corporate investment program of a competitive Brazilian sugar producer. It will contribute the continued growth of USJ by helping the company:
- expand its sugar and ethanol production capacity by 82% from 5.5 million mt to 10 million mt in Goias,
- increase cogeneration capacity from 28MW to 86 MW during harvest season,
- provide third party supply contracts to new farmers, representing additional 31,500 hectares,
- create 850 additional jobs in agriculture and the mill, which in turn will contribute to the expansion of two municipalities, and
- contribute climate change benefits through the substitution effects from displacing fossil fuels with ethanol. |
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| IFC's expected development contribution |
- Providing necessary long term financing for the expansion plan of a well managed sugar producer;
- Supporting renewable energy through increase in cogeneration capacity;
- Providing technical assistance in the implementation of a clean production program;
- Assisting the Company in its sales of Carbon credits;
- Assisting the Company in enhancing its environmental and social management system. |
| Environmental and social issues - Category B |
| This is a Category B project. The client’s facilities have moderate impacts on the environment and the community, and are manageable by readily available technologies. Please refer to the Environmental and Social Review Summary for more details. |
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| For inquiries about the project, contact: |
Carlos Alberto Orzari, Financial Administrative Manager
U.S.J. - Açucar e Alcool S.A
Fazenda Sao Joao, CP 13 / CEP 13600-970 - Araras – São Paulo, Brazil
Telephone: + 55 19 3543 7800
Website: http://www.usj.com.br/
The environmental documents will be locally disclosed at:
Araras: City Hall – Agency of Science Technology and Development;
Quirinopolis: City Council
Cachoeira Dourada: City Council |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
| City Council (Camara dos Vereadores) of the 3 affected municipalities: Araras, Quirinopolis, Cachoeira Dourada. |
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