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Vale do Parana SA
Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
Vale do Parana S.A.
Sugar and Confectionery
Date SPI disclosed
September 20, 2006
Projected board date
October 23, 2006
Invested: April 6, 2007
Signed: February 13, 2007
Approved: January 17, 2007
View Environmental & Social Review Summary (ESRS),
Vale do Parana SA (Vale do Parana or the company) is a special purpose company established in Brazil to grow sugar cane, construct, and operate a state-of-the-art mill to produce fuel ethanol and sugar in Suzanapolis, western region of the State of Sao Paulo, Brazil. The mill will be developed in phases starting in 2008, when it will produce approximately 70,000 m3 of ethanol, until 2011, when it will produce approximately 90,000 m3 of ethanol (for the internal market) and 140,000 mt of raw sugar for the export market. Upon full implementation, Vale do Parana will have a total milling capacity of 2 million mt of cane/year supplied from 22,000 ha of sugar cane, 50% of which will be cultivated on leased land with the remainder sourced from dedicated third-party suppliers.
The project will take advantage of:
- favorable export market conditions created by the reform of EU’s sugar policies;
- increased demand for fuel ethanol, mainly in the Brazilian market, but also of prospects for increasing international demand;
- sponsors experience in operating sugar/ethanol mills in Brazil and other countries in Latin America; and
- the agronomic and infrastructure environment that allows mills in this region of Brazil to be the world’s lowest cost producers.
Project sponsor and major shareholders of project company
Project Sponsors are Unialco SA (Unialco), of Brazil, with 50%; Manuelita SA (Manuelita), of Colombia; and Pantaleon Sugar Holdings Co. Ltda. (PSH), of Guatemala. Manuelita and PSH will participate in the Project through an equally-owned special purpose company named Colgua SA (Colgua) that owns 50% of the company.
Total project cost and amount and nature of IFC's investment
The total project cost is estimated at $108 million. The proposed IFC investment includes a $28 million A loan and a $7 million convertible C loan for IFC’s own account, for a total of $35 million.
IFC investment as approved by Board
35 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
The project will be built in a greenfield site, approximately 20km of the city of Suzanapolis, in the north-western region of the state of Sao Paulo. The site is located in the center of the area that will be used to produce sugar cane to supply the project. The area around the project’s site is currently used for low density cattle ranching.
Anticipated development impact of the project
The project will be the first sugar/ethanol mill in this corner of the state, a region with one of lowest incomes in São Paulo, and will have an important development impact through:
- job creation and diversification in a primarily agricultural region that has few job opportunities due to concentration in low density cattle ranching;
- tax generation for a municipality that has low tax revenues, which will allow it to invest in public services;
increased income generation for the region’s farmers (sugar cane provides a better return than cattle ranching); and
- the possibility of attracting other sugar/ethanol investments for this region.
IFC's expected development contribution
Besides providing scarce long term financing for the project IFC will:
- help strengthen the environmental and social policies of the company;
- support the first south-south investment in the sector;
- continue its support for the expansion, increased professionalism and consolidation of the Brazilian sugar/ethanol sector.
Environmental and social issues - Category B
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
This is a new mill and modern sustainability practices in the industry have advanced significantly in recent years enabling sugar mills improve environmental & social performance. Vale do Parana will have a proactive approach to resolving the impacts listed below.
The review analyzed the following potential environmental, health and safety, and social impacts:
- Management systems for environmental, health & safety and social affairs;
- Land acquisition process and land use permits;
- Environmental planning and permits;
- Sustainability and quality of potable water supply;
- Management of emissions to the environment (liquid effluent, solid waste and air emissions)
- Hazardous material management;
- Biological and chemical control of pests;
- Working conditions for direct and contracted employees, including sugar cane workers;
- Occupational health and safety in plantations and facilities;
- Sources of sugar cane for the new mill and if construction and operation of the new mill will have economic or social displacement consequences;
- Community development.
The identified environmental, social and health and safety impacts which require ameliorative activities are summarized in a Environmental and Social Action Plan (ESAP) that Vale do Parana will implement as part of IFC’s Loan Agreement. Upon successful implementation of the agreed mitigation measures, the proposed Project will meet Brazilian laws and regulations as well as the applicable World Bank/IFC environmental, social and health and safety policies and guidelines.
For inquiries about the project, contact:
Julio Cesar Giovanetti, Project Manager
Estrada Vicinal Angelo Zancaner – Km 30
Guararapes, São Paulo
CEP 16700-000 – Brazil
Telephone: +55 (18) 3606 8900
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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