The proposed joint venture, which still requires regulatory approval, will produce and commercialise ethanol and power from sugar cane and distribute a variety of industrial and transportation fuels through a combined distribution and retail network in Brazil. It will also explore business opportunities to produce and sell ethanol and sugar globally.
“The proposed joint venture is set to pool our complementary businesses, enhance our growth prospects in ethanol production globally and support our growth platform for our retail and commercial fuels businesses in Brazil,” said Mark Williams, Shell Downstream Director. “Over the next 20 years, sustainable biofuels are one of the most realistic commercial solutions to reduce CO2 emissions from transport.”
“While there is still plenty of integration planning to do before we launch the proposed joint venture, this is an important milestone in our effort to create one of the world’s most competitive sustainable biofuels companies,” said Rubens Ometto Silveira Mello, Cosan’s Chairman of the Board and non-executive Chairman-elect of the proposed joint venture.
With annual production capacity of over 2 billion litres, the proposed joint venture will be one of the world’s largest ethanol producers. The inclusion of Shell’s interests in Iogen Energy and Codexis would enable the joint venture to deploy next generation biofuels technologies in the future. The company will also generate electricity from sugar cane bagasse in cogeneration plants at all mills. Ten cogeneration plants are already operational.
With total annual sales of about 18 billion litres of fuels, the proposed joint venture will have a competitive position in the Brazilian fuels distribution market built upon a network of about 4,500 retail sites.
Today’s agreement follows the signing in February of a non-binding memorandum of understanding. With the transaction terms agreed, Shell and Cosan, which remain as competitors, will now focus on securing regulatory approvals and starting integration planning before launching the new company.