Brazil
Press Release

Brazil's Cosan signs second generation ethanol contract with Shell

Bnamericas Published: Monday, November 07, 2022

By Cosan

Cosan informs its shareholders and the market in general that its jointly owned subsidiary Raízen S.A. (“Raízen” or “Company”) signed on this date an agreement to supply second generation cellulosic ethanol (“E2G”) produced from sugarcane biomass, until 2037 to Shell Trading Rotterdam B. V. (“Shell”) (“Agreement”), aligned with the Investment Program for the construction of 5 new E2G plants, totaling R$6 billion of CAPEX.

The Agreement between Raízen and Shell establishes the supply 3.3 billion liters (3.3 million m³) of E2G that will be produced in 5 new plants with an expectation to start operations between 2025 and 2027. Such plants will be fully integrated to the Company’s Bioenergy Parks. Considering the minimum price defined, the revenue from sales under this Agreement will be equivalent to at least EUR3.3 billion.

Raízen expects an EBITDA Margin of approximately 50% (fifty percent), while maintenance CAPEX is estimated around R$50 million per plant/year, yielding a robust cash flow.

The evaluation of the terms and conditions of this Agreement has followed strictly Raízen´s Conflict of Interest Management and Related Party Transactions Policy.

This move is in line with the Company’s strategy of providing advanced solutions to contribute to a low-carbon economy. More information on Raízen’s Notice to the Market released on this date (available at https://ri.raizen.com.br/en/).

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