The company will start operations in the Brazilian ethanol and electricity markets as it expands its business with local mills

Czarnikow has received a positive signal from Brazil's oil and fuel regulator, ANP, to start a new company called CzEnergy to market ethanol in the country, a market the company says is 50% larger than that of sugar.

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Ethanol accounts for about 40% of the fuel used by the light vehicle fleet, the world's second largest market for biofuel, behind only the United States. Most Brazilian cars have engines that run on 100% hydrous ethanol.

“The sugar producer, not only in Brazil, but in other places, is also producing ethanol and electricity (from biomass). That's why we want to provide marketing, financing and hedging services for products other than sugar,” said Tiago Medeiros, head of Czarnikow Brasil.

Electricity and Ethanol

The company plans to trade electricity in Brazil's so-called ACL market, a less-regulated business environment where consumers and producers can freely enter into supply contracts.

The ACL electricity market in Brazil has tripled over the last four years as the current government seeks to deregulate the sector.

In an interview, Medeiros said the Brazilian unit is having a good year when it comes to energy and ethanol, as sugar export volumes have skyrocketed due to increased local production and poor harvests elsewhere. Brazilian exports grew around 60% in the current season.

He said China's sugar buying has been strong, due to higher import quotas distributed by Beijing to importers. “They will probably buy around 5m tonnes this year to be the biggest sugar buyers in the world again,” he said.