Bunge to raise $2.5 billion in bonds for sugar investment

Bunge continues to expand operations, looking now to dominate the sugar industry (and subsequently the government subsidized ethanol industry) in Brazil.

Bunge Ltd. (BG), the world’s second- largest sugar trader, said it plans to spend $2.5 billion to boost sugar and ethanol production in Brazil over the next five years and may sell bonds to help finance the investments.

“We are very positive on the sugar and ethanol outlook,” Chief Executive Officer Alberto Weisser said at a press conference in Sao Paulo. “Our investments come at the right moment, as the world is yearning for food and clean energy.”

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. Sugar and ethanol capacity will grow by almost half.

Sugar prices jumped 50 percent 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.

The sugar and so-called bioenergy business are a “priority” for the company, said Weisser, who is targeting sales growth of 8 percent to 10 percent 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.