A new investment will help tackle climate change in Brazil while promoting renewable energy and biofuels. IFC, a member of the World Bank Group, is investing $100 million in Sao Martinho, a leading sugar and ethanol company in the country, to support green investments in the agribusiness sector, contribute to sustainability, and accelerate economic recovery.
IFC's financing package to Sao Martinho includes a twelve-year $55 million loan from IFC's own account and a 7-year $45 million loan mobilized from Rabobank. IFC's long-term funding includes a green loan that will follow the Green Loan Principles (GLP). The GLP have been developed with a view to promoting the development and integrity of the green loan product. Their aim is to create a high-level framework of market standards and guidelines, providing a consistent methodology for use across the green loan market. This portion of the loan will be used to finance the completion of Sao Martinho's cogeneration expansion by replacing existing boilers and generators with others of greater capacity and efficiency.
The project represents the first Green Loan in the Sugar & Ethanol sector in Brazil. IFC's investment will also allow Sao Martinho to renovate its sugarcane plantations using advanced climate-smart agricultural techniques, which include the maximization of the use of organic fertilizers, the use of localized soil preparation technique, the recycling of nutrients and the use of images in real time to monitor the development of the cane fields.
The increase in the production of clean and renewable energy contributes to the development of the Brazilian energy matrix. This will allow the capacity to supply the equivalent of 46 thousand homes (per year) using the same amount of bagasse, as well as the increase in the level of operational safety, through automated processes, and reduction of NOx emissions.
Brazil is the seventh-largest emitter of greenhouse gases (GHG) in the world. In alignment with its Paris Climate Agreement target, the country is committed to reducing 43 percent of GHG emissions between 2005 and 2030. To achieve this, the country needs an increased share of sustainable biofuels and clean energy in its energy mix.
'These are investments that will increase Sao Martinho's energy volume by approximately 20%, contributing to the Brazilian energy matrix, especially during the harvest period that coincides with the dry period in the Center-South region of the country. In addition, we will purchase equipment from regional companies, generating around 400 new jobs directly and indirectly and boosting the local economy', says Felipe Vicchiato, CFO of Sao Martinho.
'IFC encourages investments that contribute to strengthening energy efficiency and creating sustainable agriculture solutions,' says Carlos Leiria Pinto, IFC's Country Manager in Brazil. 'In this project, IFC brings its knowledge and experience to expand the use of green finance in agribusiness to a level that is more compatible with the sector's participation in the economy,' he adds.
IFC's investment will also support Sao Martinho, an existing IFC client since 2017, to strengthen its environmental and social practices in the sugar and ethanol sector through the continuous implementation of internationally recognized environmental and social standards.
Over the past five fiscal years, IFC has invested more than $1 billion in Brazil's agribusiness and forestry sector in long-term investments, including $479 million mobilized from other investors. In the fiscal year 2020, IFC's new long-term investments in Brazil, across all sectors, totaled $2.2 billion, including $615 million in third-party resources.
About IFC
IFC - a member of the World Bank Group - is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About Sao Martinho
Sao Martinho is among the largest and most efficient sugarcane groups in Brazil, with an approximate crushing capacity of 24 million tons of sugarcane and an average harvest mechanization index of 100%, a benchmark in the sector. It has four units in operation: Usina Sao Martinho, in Pradopolis, in the region of Ribeirao Preto (SP); Usina Iracema, in Iracemapolis, in the region of Limeira (SP); Usina Santa Cruz, located in Americo Brasiliense (SP) and Usina Boa Vista, in Quirinopolis, 300 kilometers from Goinia (GO). The Sao Martinho, Santa Cruz and Iracema units produce sugar and ethanol, while the Boa Vista mill is dedicated exclusively to the production of ethanol. All of them generate electricity from the burning of sugarcane bagasse, ensuring self-sufficiency and the sale of surplus. For more information, visit www.saomartinho.com.br
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Contacts
?In Sao Paulo, IFC
Shirley Emerick
Phone: +55 11 98403.9143
Email: semerick@ifc.org
SÃO MARTINHO S.A. 
