Merger puts ETH Bioenergy production near top

By Luke Geiver | February 09, 2010
Posted Feb. 19, 2010

Brazilian biofuel producers ETH Bioenergy and the Brazilian Renewable Energy Company (Brenco) have merged, putting the newly formed company's total ethanol capacity among the world's highest. After signing a memorandum of understanding to discuss the possibility of a joint venture in October, the new company under the existing ETH Bioenergy name will have roughly 790 MMgy of ethanol capacity while also producing 2,700 gigawatts of electricity from sugarcane bagasse by 2013.

As 65 percent owners, ETH will take over Brenco's facilities that were unable to continue expansion, weakened by the recent credit crunch. "The two companies feature assets that combine technology and production scale, and this strengthens the production center concept," said Philippe Reichstul, president of Brenco, and former chief executive of Brazilian oil giant Petrobras. "The bio-energy sector will grow significantly in the near future and the new company will have great opportunities in this context."

Initially backed by AOL Inc. co-founder Stephen Case and others, the Brenco facilities will now be overseen by current ETH shareholders. "This strategic operation represents a decisive step in ETH's growth plan and creates a bioenergy leader that combines competitiveness and sustainability," said Jose Carlos Grubisch, president of ETH. Job creation has also grown during the merger. With 7,600 workers currently operating existing ETH facilities, the new venture will move that total closer to 10,000 by 2012, according to Grubisch. "ETH is a company with a vocation for growth, and the strong investment program to be implemented over the coming years will generate more than 2,400 jobs in addition to the training of all operations crews."

Even with one of the world's largest capacity levels, ETH will also seek other revenue streams outside of ethanol. "Despite the fact the focus will be on ethanol and energy made from biomass," Grubisich said, "we have some units that produce sugar, which will help improve the cash flow."