BRAZIL: RPA consulting firm estimates 18% of mills won't operate in 2018

Published: 11/27/2017, 3:05:19 PM

Brazilian consulting firm RPA estimates that 18% of the 444 mills in the country won't operate in the 2018/19 season, according to Brazil's Valor Econômico newspaper.

The economic crisis that has influenced the sector's growth for about a decade is still impacting the productivity of sugarcane fields, in addition to unfavorable weather conditions.

In the past season 76 mills haven't operated, and 79 are expected to stay closed in the next cycle.

Raízen Energia decided to close operations of its Tamoio mill in Araraquara, and of Dois Córregos, both located in São Paulo state. The former produces only sugar, while the latter makes sugar and ethanol.

According to the company, which has increased investment in agriculture, other mills located in the same region will absorb the available raw material from the closed units. Raízen has recently acquired two mills from Tonon, with crops showing low productivity after a long period of financial difficulty.

Biosev will also close its mill in Maracaju, Mato Grosso do Sul state, for the next season. The mill, which produces sugar and ethanol, has the capacity to process 1.8 million tonnes of sugarcane per crop but has been milling less than that over the past years.

The sugarcane which used to be processed by Maracaju will now be delivered to two other units in the region, which have greater processing capacity.

The closure of units has had a greater impact on jobs in the segment than on production. The shutdown of these three mills will eliminate 750 jobs.

On Tuesday, Raízen was forced by a court order to overturn dismissals at Tamoio mill and negotiate terms of the layoffs with local unions.

Another company that could paralyze one of its mills is Renuka do Brasil. Embroiled in a judicial recovery process and facing complications after a local court suspended the auction of one of its units, the company operates with less than half its total capacity, of 10.5 million tonnes, according to a source close to the subject.