Sumitomo Corporation Invests in Biomass Fuel Manufacturing Business in Brazil

NEW YORK, Feb. 26, 2016 /PRNewswire/ -- Sumitomo Corporation today signed a contract to acquire up to 20 percent of Cosan Biomassa S.A. ( "Cosan Biomassa"), a subsidiary of the world's largest sugar & ethanol company, Cosan S.A.Industria e Comercio ( "Cosan S.A.") and producer of sugarcane pellets for power generation, subject to the prior approval of anti-trust authorities in some jurisdictions.  

Biomass is a renewable energy source such as solar, wind and small-scale hydro power that provides cleaner, sustainable energy. Such investments in renewable energy are increasingly important with Japan's commitment to reduce its greenhouse gas emission by 26% by 2030 as part of the Paris Climate Treaty.

"Brazil is already among the largest producers and exporters of agricultural commodities in the world.  Pelletized biomass is a new commodity being created to serve the low carbon economy," said Mark Lyra, Cosan Biomassa CEO.  "By making use of sugarcane residues and benefiting from the economic and environmental advantages that the shift to rail logistics brings to the game, Brazil is positioned to become the Saudi Arabia of renewable energy."

"By the year 2030, we foresee that Japan will consume as much as 10 million+ tons of pelletized biomass, the majority of which would come from overseas. Renewable energy including biomass will play a prominent role in our power generation sector by that time. We believe a relevant portion of this demand will be met by agricultural waste, particularly sugarcane biomass pellets produced in Brazil. Sugarcane's productivity and abundant availability tied to the fact that we are using its residual byproduct as a raw material gives us a unique sustainability condition when compared to other biomass sources in the world," says Yoshinobu Kusano, General Manager, Biomass Business, Sumitomo Corporation."

Cosan Biomassa has developed a fuel pellet made from sugarcane residues such as bagasse from the sugar mill and straw left over in the sugarcane field, and built a large-scale production plant (annual capacity 175,000 tons) for the first time in the world last September, which commenced a commercial production in December 2015.

Through the participation of Sumitomo Corporation, Cosan Biomassa will increase its exports to Japan and Europe along with increased domestic sales. It is said that there is a potential of 45 million tons/year of sugarcane pellets from the sugarcane farms in Sao Paulo state alone, Cosan S.A. being a dominant player there thorough its group company.  With this abundant availability, the venture would aim for 2 million tons by 2025, and as much as 8 million tons in the future, subject to future growth of the market as well as a satisfactory return.

Sumitomo Corporation regards biomass energy as a promising source of renewable energy, and started importing biomass fuel for power generation to Japan in 2008.  In addition, Sumitomo Corporation's subsidiary, Summit Energy Corporation, has been managing a biomass power plant and plans to build more. Sumitomo Corporation has been in search of competitive and sustainable resources outside of Japan to supplement domestic biomass resources and to step into the European market, where the bulk of fuel pellet demands exist. The company regards Cosan Biomassa as an ideal resource to fulfill both needs.

Today, Sumitomo Corporation and Cosan S.A have begun strategic collaboration for the development of the sugarcane pellet business through Cosan Biomassa.

About Sumitomo Corporation

Sumitomo Corporation is a leading global trading company with 110 locations in 66 countries and 23 locations in Japan. The entire Sumitomo Corporation Group consists of nearly 900 companies and more than 70,000 personnel. The SC business is continuously expanding into a diverse range of products and services. Its core business units are Metal Products, Transportation & Construction Systems, Environment & Infrastructure, Media, Network, Lifestyle Related Goods & Services, Mineral Resources, Energy, and Chemical & Electronics.

About Sumitomo Corporation of Americas

Established in 1952 and headquartered in New York City, Sumitomo Corporation of Americas (SCOA) has 25 offices in major North and South American cities. SCOA is the largest subsidiary of Sumitomo Corporation, one of the world's leading traders of goods and services. As an integrated business enterprise, the firm has emerged as a major organizer of multination projects, an expediter of ideas, an important international investor and financier, and a powerful force for distribution of products and global communications through a network of offices worldwide.

SCOA continues to grow its renewable energy business and has extensive experience developing, operating and owning power generating facilities such as wind, geothermal, biomass and solar businesses around the world. Investments include 200MW Mesquite Creek Wind Farm in western Texas; 845MW Shepherds Flat Wind Farm in Oregon; two Kansas wind farms, the 131MW Cimarron II and 168MW Ironwood projects; Stanton wind project, a 120MW wind power facility in Texas; and Desert Sunlight, a 550MW solar power project in California.   For more information visit www.sumitomocorp.com.

About Cosan Group

Cosan Group owns the world's largest sugar and sugarcane-based ethanol manufacturer and is one of the largest group companies in Brazil which is developing various businesses in logistics and energy field such as Brazil's leading railway logistics service, grain export terminal operating business, gasoline and natural gas distributing business. Based on consolidated sales, Cosan Group is ranked as third largest among Brazilian companies, excluding financial institutions. (FY2014)

SOURCE Sumitomo Corporation

Related Links

http://www.sumitomocorp.com