Bunge Ltd. (BG) is mulling plans to invest some $2.5 billion to bolster sugar and ethanol production in Brazil over the next five years, reported Bloomberg Tuesday. Bunge is the world’s second- largest sugar trader and may sell bonds to help finance the investments.
 
Bunge Executive Officer Alberto Weisser, revealed the investment plans Tuesday during a press conference.  

“The investments come at the right moment, as the world is yearning for food and clean energy,” said Weisser.

Bunge plans to invest the cash between next year and 2016 to boost capacity at eight mills in Brazil, the world’s largest sugar producer and exporter. The plan will boost sugar-cane crushing capacity to 30 million metric tons a year from 21 million tons, according to the White Plains, New York-based company, said Bloomberg.

According to Bloomberg, Bunge’s Sugar and ethanol capacity will grow by almost half. Sugar prices jumped 50 per cent in the past year after a drought and freezing temperatures in Brazil’s Center South cut output of sugar-cane, which is turned into sugar and ethanol, for the first time in a decade. Ethanol prices rose 11 percent, noted the report.

According to Weisser, the sugar and bioenergy business are a “priority” for Bunge, which is targeting sales growth of 8 per cent to 10 per cent a year over the next five years, the fastest among all the four areas where Bunge is active.

The others are fertilizer, food & ingredients and agribusiness, according to a July 28 company presentation, said the report.

Bunge Brazil CEO Pedro Parente, said the company is investing $350 million this year in Brazil, mostly to replant and plant new sugar cane fields. It is planting about 70,000 hectares of land, an area about the size of Chicago, said the report.

Bunge’s eight Brazilian mills may be further expanded to crush 40 million tons.

“After Bunge concludes its current investment plan, it may consider further expanding the mills,” Parente said.

“Green fields are not economically viable,” he noted.

Building new mills is also not viable partly because of the valuation of Brazil’s real, Weisser said.

Bunge expects to crush about 15.5 million tons of sugar cane this year, down from an earlier estimate of 16.5 million, because of adverse weather in Brazil’s Center South, the world’s largest producing region of sugar, it said.

23rd August 2011