Cargill in talks to buy two sugar mills from Antonio Ruette Agroindustrial

Cargill is holding negotiations to purchase two sugar facilities from Brazilian firm Antonio Ruette Agroindustrial.

The facilities are located in the primary sugarcane belt area of Sao Paulo state and have an annual processing capacity of 3.7 million tonnes, reported Reuters.

This is the first deal in several years that involves a large commodities trader and may signal the restarting of transactions in the Latin American country’s troubled sugar industry.

Cargill’s $7.4bn investment firm Black River Asset Management is holding the talks. Black River is likely to spend R$680m ($176m) on the two sugar mills, which comprises a debt of R$530m, reported local financial newspaper Valor Economico, citing sources familiar with the matter.

This move comes as Cargill is keen to expand its sugar processing capacity in Brazil. There is also a possibility of prices recovering following its longest dip since 1962 as the supply of sugar is expected to see a shortfall, reported Bloomberg.

Since 2011, approximately 50 mills in the country have been closed. However, with the dip in Brazilian currency value, domestic sugar processing facilities are benefiting as it allows them to enter export markets. The currency has seen a 32% dip this year as the economy has been experiencing a recession.

Cargill operates three sugarcane mills in the Latin American country through joint ventures and has a total processing capacity of 10.5 million metric tonnes.