COFCO’s sugar expansion sees Chinese giant acquire new Brazilian mills

Chinese food giant COFCO Corporation has taken a decisive step to fortify its global supply chain by agreeing to purchase two sugarcane mills in Brazil from Bunge, a prominent international agribusiness group. The deal marks a significant moment in the COFCO sugar expansion strategy, as the firm looks to solidify its standing within the world’s leading sugar-producing nation.

While the financial terms of the transaction were not officially disclosed by the companies involved, agribusiness consultancy Veeries has estimated the deal’s value to be in the region of US$350 million. According to a local media report, the acquisition involves the Rio Vermelho and Nova Unialco mills, both situated in the Araçatuba region of the state of São Paulo. These facilities possess a combined processing capacity of approximately seven million tonnes of sugarcane annually.

Strengthening COFCO’s sugar expansion in Brazil

Prior to this latest agreement, COFCO International, the overseas agricultural trading arm of the state-owned conglomerate, already managed four sugar mills within São Paulo state: Catanduva, Potirendaba, Meridiano, and Sebastianópolis do Sul. The integration of the two new assets is expected to contribute an additional 700,000 tonnes of annual output, pushing COFCO’s total production capacity in the region to approximately 2.2 million tonnes according to the report.

Daniel Pagnani, managing director of COFCO International’s sugar mills, noted that the acquisition aligns perfectly with the company’s long-term objectives to bolster its business operations. He emphasised that the deal would reinforce the group’s industrial presence in Brazil, enhancing its capability to operate in a more integrated fashion across key agricultural regions.

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Industry analysts reportedly view the move as a calculated effort to ensure national food security. Willian Orzari Hernandes, a partner at FG/A, a Brazilian agribusiness consultancy, suggested that the acquired volume aligns closely with China’s import needs. “With this deal, the Chinese are securing sugar supply for the coming years,” Hernandes told media.

As a result of this agreement, COFCO is projected to increase its total sugarcane crushing capacity in Brazil from 18.5 million to 25.5 million tonnes per year. This development positions the firm as one of the pre-eminent players in the sector. This strategic move coincides with a period where sugar prices have begun to recover from extended lows, amid global concerns that the El Niño weather phenomenon may disrupt worldwide output.