The agreement comprises the construction of two warehouses in São Paulo state, one inland and another in Santos port,and secured access for Tereos to VLI transportation system.
Tereos and VLI announce a joint investment for the construction of two sugar warehouses in São Paulo state within VLI’s railroad system to Santos port and the signing of a long-term agreement for the transportation of 1 million tonnes of raw sugar per year. During this fiscal year and next, Tereos will invest a total of R$ 145 million. VLI will also invest R$ 60 million over two years.
Through this partnership, Tereos, the 2nd largest sugar producer in the world, secures the inland logistics and port outlet for its current and expected growth in raw sugar production and trading.
VLI, a rail-based logistic operator that provides solutions to the agribusiness, steel and industrial products in Brazil, is one of the most important railway company in Brazil and its core market is agribusiness – accounting for almost 50% of total transported cargo. Under this agreement, the company will join its experience and knowledge on big transportations to the solid and longstanding position of Tereos in Brazil.
The partnership foresees a commercial agreement for rail transportation of raw sugar from VLI’s inland terminal in Guará city in the Northwest of São Paulo state, close to Tereos’ production cluster, to VLI’s terminal in Santos port, known as Tiplam, to perform elevation services to load vessels for exports. From 2013 to 2017, the sugar handled by VLI doubled (2.3 million tonnes to 4.6 million tonnes) driven by these terminal operations.
Under the agreement, Tereos will also invest in the construction of a raw sugar warehouse at Guará with a storage capacity of 80,000 tonnes and another at Tiplam with a storage capacity of 114,000 tonnes, which will be operated by VLI.
Brazil is the world’s largest producer and exporter of sugar, with a market share close to 50% of global exports. This investment, in such a key market for sugar, offers a solid entry platform for Tereos in the Brazilian logistics segment. For Tereos, it represents an important step to enhance its raw sugar business. During last fiscal year, Tereos Commodities traded some 1.4 million tonnes of sugar globally, an increase of around 40% compared to the previous year.
Alexis Duval, Chief Executive Officer of Tereos, issued the following statement: "This investment reinforces the importance to be positioned in logistics in Brazil and the relevance of the Brazilian sugar division for Tereos Group. It is a great opportunity for Tereos to have a long-term partnership with a leading company in logistics with a state-of-the-art integrated system. This investment will strengthen Tereos foothold in Brazil.”
Marcello Spinelli, Chief Executive Officer of VLI, commented the following: “VLI has as its main commitment to transform logistics in Brazil, always sharing value to the partnerships closed and with all its stakeholders. The announcement with Tereos emphasizes our mission to offer logistical solution integrated with our client business, and VLI has the ideal structure for this strategic agreement: since 2013, we invested more than R$ 9 billion on an integrated logistics system, interconnecting railways, terminals and ports. The fact that we have doubled our sugar transportation volume in recent years is a great result of these investments.”