by Jim Lane (Biofuels Digest) In New York, in the wake of a $37 million Q1 loss in its sugar unit, Bunge CEO Soren Schroder, who took the reins of the company in June, announced yesterday that the trading giant is commencing what he termed a “thoughtful comprehensive review” for its sugar business, including a potential sale of all the assets.
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The cause of the troubles? After buying five sugar mills in 2006 and entering the sugar business in 2006, Bunge has struggled along with the entire sector in the face of low sugar prices, which declined to a low of 16 cents a pound (the May 2014 NYMEX sugar contract has since recovered to $0.183, but apparently not enough to convince Schroder of the long-term opportunities in sugar. The sugar business had swung into losses starting with the forth quarter, losing $49 million in the face of falling ethanol and sugar prices.
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The announcement puts more strategic light on Brazil for advanced biofuels — which is recent years has been considered a haven for potential collaboration between US technologies and Brazilian producers — but often finding deployment challenges as both early-stage advanced technology developers, as well as cash-strapped Brazilian operations — struggled to form capital for large-scale deployments of new technology.
This past summer, Solazyme and Bunge broke ground on a their 100,000 metric ton renewable oil production facility adjacent to Bunge’s Moema sugarcane mill in Brazil. Construction started on schedule and the plant is targeted to be operational in the fourth quarter of 2013. It will service the renewable chemical and fuel industries within the Brazilian marketplace and will initially target 100,000 metric tons per year of renewable oil production.
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Last October, Bunge’s innovation arm invested an undisclosed amount in the Series E funding round for California-based Cobalt Technologies and Bunge aid at the time that it anticipates introducing the biobutanol technology in its sugarcane mills. The companies are working Rhodia to produce n-butanol from bagasse at a pilot facility in Campinas.
Last summer, Cobalt Technologies and Rhodia announced they would begin joint development and operation of a biobutanol demonstration facility in Brazil. The Cobalt/Rhodia plant is planned to utilize sugarcane bagasse to make n-butanol; bagasse is used at sugar mills to provide process energy to drive the mill and to supply power to the local grid; the Cobalt project will utilize that fraction of the bagasse that generates power for the grid, or any residual biomass that is burned as waste.
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At the same time that its sugar and ethanol operations are in doubt, Bunge is still growing its biodiesel unit in Brazil. In March, Bunge inaugurated its new biodiesel factory in Nova Mutum, Mato Grasso, which has a capacity of nearly 110,000 gallons of biodiesel per day from soy, or 40 million gallons per year. READ MORE