While pumps in gas stations worldwide churn out gasoline containing increasingly higher doses of ethanol, a Brazilian company is getting ready to grow by riding the waves of this movement. Dedini, a maker of industrial equipment, whose cash cow is alcohol and sugar production technology, intends to increase its production capacity by two and a half by the end of next year.
The information was supplied by the business vice president at the company, José Francisco Davos. Dedini should turn into a giant in a global market that seeks cleaner fuels, hinting at a rise in ethanol consumption.
The history of Dedini with alcohol and sugar equipment is similar to that of Brazil with sugar cane. The country pioneered and domesticated the sector, and now has become a global leader in alcohol manufacturing.
Dedini also started out small, back in the 1920s, by supplying parts and maintenance to alcohol and sugar plants, and presently it is the largest Brazilian company in machinery and equipment for the segment.
Now, as Brazil takes on a worldwide leadership role in clean fuels, Dedini is also preparing to take large steps. Revenues should rise up from 1 billion Brazilian reais (US$ 558 million) in 2006 to 2.5 billion reais (US$ 1.39 billion) by the end of 2008, and the number of employees should increase from 4,800 to 6,000 people.
The growth will be driven by the domestic market itself, which plans on establishing 30 new ethanol plants per year up until 2010, and also by the foreign market, which is beginning to add ethanol into gasoline, therefore taking the necessary steps to manufacture the product.
According to Davos, more than 30 countries have projects for mandatory or optional addition of ethanol into gasoline. "Five years ago, there were less than five countries," he says.
Dedini, whose headquarters are in the city of Piracicaba, in the southeastern Brazilian state of São Paulo, receives two to three foreign delegations interested in manufacturing ethanol each week. "In Africa, there are projects for investment in alcohol and sugar in Mozambique, Nigeria, Liberia, Sudan and South Africa," says Davos.
The Kenana Sugar Company, for example, a sugar manufacturer based in Sudan, wants to start producing ethanol within 15 years. According to the business vice-president at Dedini, Sudanese executives visited the company last year and again early this year. Dedini sent its engineers to the country two months ago.
For the time being, though, there are only conversations and no deals closed. Dedini should conclude, in 90 days, according to the executive, a deal for supplying equipment to two ethanol production projects in another African country: Mozambique.
Dedini sells equipment to full plants in the field of alcohol and sugar, ranging from sugar cane reception to storage and delivery of the final product. Therefore, many international companies, some of which are already sugar producers, contact the company seeking instructions on how to make ethanol.
The company provides some information about how it is done in Brazil, but it also forwards them to partnering companies, in the agricultural and logistics fields, that have know-how in those areas.
Africa and the Caribbean, according to Davos, are the world's most favorable regions for ethanol production. "Africa is located along the same parallel as Brazil, ethanol settles people in rural areas, a plant generates work for 2,000 to 3,000 people, including work in the fields, industry, transport and logistics," says Davos.
According to Davos, ethanol will not replace petroleum, but it will allow for the reserves of the commodity to last longer. The African countries, according to him, want to produce it in order to mix it into gasoline, and then supply their own markets.
"Europe might also develop projects in some of those countries to ensure a supply," claims the executive.
The plants currently being installed, in Brazil and around the world, according to Davos, have an average processing capacity ranging from 2 million to 2.5 million tons of cane per year. Equipment made by Dedini for such plants cost from 300 million reais (US$ 167.4 million) to 350 million reais (US$ 195.3 million).
Dedini's customer base includes companies from 40 different countries. In addition to capital goods for the production of sugar and cane, the company also makes machinery for breweries, energy, pulp and paper, foodstuffs, beverages, biodiesel and mining.
Nevertheless, the bulk of exports go to the sugar and alcohol sector. "Wherever there is sugar cane, Dedini is there," claims Davos. The goal of the company, according to the executive, is to have exports answer to 15% to 20% of revenues. In recent years, though, they have remained at 7% to 10%, since revenues are growing. This year, the rate should also remain between 7% and 10%.
The large deals recently closed by Dedini abroad include the supplying of a tandem, a set of cane crushers, to the United States-based US Sugar Corporation, late last year.
The tandem, which was the largest ever manufactured in the world, has a processing capacity of 28,000 tons of cane per day, and was incorporated into the production process at the company, which is the United States' leading sugar manufacturer.
Dedini also supplied alcohol distillation plants to Caribbean countries from 2005 until the current year. Two went to Jamaica, one to Costa Rica, and another to the Virgin Islands.
In Brazil, Dedini installed four complete plants this year. In 10 other plants, the company was responsible for 80% of equipment, and in another 10, for half.
Dedini, an unlisted company, owns six factories. Three are located in the city of Piracicaba, one in Sertãozinho, also in São Paulo, one in Jaboatão dos Guararapes, in the northeastern state of Pernambuco, and another in Maceió, in the state of Alagoas, also in the Northeast.
Approximately 45% of its production is turned to alcohol and sugar technology. Another 15% consists of equipment for generating energy from agricultural products, such as boilers for production of energy from sugar cane bagasse. Since its inception, the company has produced 1,500 boilers, 3,000 crushers, 800 distilleries, and 350 full plants.
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