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BP and Bunge Team Up in New Bioenergy JV

December 2, 2019
BP and Bunge launched a new bioenergy-focused joint venture in Brazil. Image courtesy of BP
BP and Bunge launched a new bioenergy-focused joint venture in Brazil. Image courtesy of BP

Agribusiness Bunge Limited and energy firm BP said Monday that the formation of its new joint venture (JV), BP Bunge Bioenergia, was completed, combining the companies’ Brazilian bioenergy and sugarcane ethanol businesses. The new entity is the second largest bioethanol operator in Brazil by effective crushing capacity.

“Biofuels is an increasingly important part of a lower carbon energy system. We are proud to complete the formation of BP Bunge Bioenergia, which provides a strong foundation to build upon the capabilities of both organizations to develop ideas for growth and deliver significant operational and financial synergies,” Mario Lindenhayn, the executive chairman of BP Bunge Bioenergia, said in a BP press release. 

Under the terms of the deal, Bunge is set to receive $775 million in cash proceeds. $700 million of that sum is from non-recourse Bunge debt transferred to the JV at closing. BP will also pay Bunge $75 million as part of the transaction. The companies will own 50/50 stakes in the business.

BP Bunge Bioenergia operates 11 biofuels facilities across five states in Brazil and employs more than 10,000 workers. The JV can crush 32 million mt/yr of sugarcane and produce about 1.5 million ltr of ethanol and 1.1 million tn of sugar annually, according to BP. 

Bunge said it plans to use the proceeds to reduce its outstanding debts under its credit facilities. The companies announced plans to launch the JV in July 2019. 

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