Brazil's sugarcane belt to suspend crushing capacity

Companies in Brazil's main sugarcane belt in the center-south will likely suspend operation of plants with nearly 9 million tonnes of combined crushing capacity, as cane supplies run low and mills struggle under financial difficulties.
That volume was calculated by Reuters based on company announcements and industry sources. It could rise to more than 20 million tonnes if other plants, going through bankruptcy protection and facing uncertainty, also suspend operations.
The temporary interruptions to capacity would occur during the 2018/19 harvest, which begins in April, and would not represent a permanent loss of installed capacity. Major processors suspending plants include Raizen, Biosev and Renuka do Brasil.
Their decision signals how mills are weighed down by lack of investments in sugarcane fields and plant modernization, which lagged as the industry awaited an overhaul of the country's biofuel regulations. Citing low sugarcane supplies, Raizen-a joint venture between Cosan SA and Royal Dutch Shell PLC-said in November it will halt its Dois Corregos and Tamoio mills while redirecting sugarcane to other unspecified units.
Raizen declined to comment on the mills' crushing capacity "for strategic reasons," but a source close to the matter who is not authorized to speak to the media said the mills can jointly process almost 3 million tonnes of sugarcane per cycle.
In turn, Biosev, a unit of France's Louis Dreyfus Company, said it will not operate its Maracaju plant with 1.8 million tonnes of crushing capacity. Renuka do Brasil, a subsidiary of India's Shree Renuka Sugars, will likely suspend operation at its 4 million tonne capacity Revati plant, according to a person close to the company speaking on condition of anonymity.
Renuka could not be reached for comment. Beyond those nearly 9 million tonnes, a potential suspension of a Renuka's Madhu plant as well as two plants operated by Abengoa Bioenergia Brasil, part of Spain's Abengoa, could result in an additional 12.5 million tonnes in capacity being idled.
Both are operating under bankruptcy court protection in Brazil. Abengoa said its goal is to have mills operating normally next year. Operating under bankruptcy court protection, Abengoa is in talks with creditors to approve a reorganization plan.
The source close to Renuka said the company is weighing whether to suspend the Madhu plant. An auction to sell the Revati plant was suspended by a court, amid the protracted bankruptcy process. Brazil's center-south cane belt will crush 590 million tonnes in the 2018/19 season, a Reuters poll showed.