Brazil Study Shows 30 Ethanol Mills Near Bankruptcy, Valor Says

Sept. 29 (Bloomberg) — Brazilian policies to cap gasoline
prices may lead 30 ethanol and sugar plants to file for
bankruptcy, Valor Economico said, citing a report from a
research firm.

The mills, with a combined capacity to process 60 million
metric tons of sugar cane, have delayed payments to suppliers
for several months and aren’t operating, the Sao Paulo-based
newspaper said, citing a study by Ricardo Pinto Associados, a
firm that provides services and research to Brazil’s sugar and
ethanol industry.

Government’s efforts to contain inflation by blocking
state-run Petroleo Brasileiro SA from raising gasoline prices
have made ethanol less competitive in a market where most
drivers have the option to chose between gasoline and ethanol to
power their so-called flex-fuel cars.

Only 25 percent of Brazil’s flex-fuel cars were filled up
with ethanol last year, down from 82 percent in 2009, as the
fuel has become relatively more expensive than gasoline when
performance is taken into account, research firm Datagro said in
a report in December.

To contact the reporter on this story:
Vanessa Dezem in Sao Paulo at
vdezem@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Carlos Caminada, Steven Frank

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