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Issue #583 | Forest Products

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2014 Media Kit
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After Brazil sugar inferno, flames and red tape slow recovery

By: | at 12:58 PM | Channel(s): Ports & Terminals  

Two weeks after a massive blaze crippled exports from Santos, the world’s biggest sugar port in Brazil, flames still smolder in one of the wrecked warehouses, deep in a mountain of bulk sugar.

The warehouse, one of four three-story high, battleship-sized sheds destroyed by the Oct. 18 blaze, is still too dangerous to enter, said a security guard on duty this week. He was one of about 12 people keeping tabs on the muddy rubble that was once the main gateway for Copersucar, the world’s biggest sugar trader.

Indeed, the depot may have to be demolished and rebuilt after 35,000 tons of burned sugar is removed, he said.

The fire, the biggest in the history of Santos port, spread quickly through the warehouses via overhead conveyer belts that later crashed to the ground, leaving the terminal unable to move bulk sugar to the port’s docks.

Only the skeletal remains of giant covers were left on two other warehouses nearby that were seen by Reuters, as the blaze had destroyed their peaked metal roofs, meant to protect the commodity from southeastern Brazil’s frequent rains.

After a Reuters visit to the port and discussions with industry officials this week, it was clear that market estimates for a repair period of at least six months were justified.

Although the two warehouses that Copersucar uses to store bagged sugar are basically intact, with neat piles of the less flammable plastic-lined bags seen filling half a warehouse, these supplies shipped via container make up only a tiny share of exports from Santos.

Repairing the physical damage may be the least of Copersucar’s problems.

Because port terminals at Santos are owned by the federal government and leased to private companies, any changes to the infrastructure are subject to approval by regulators ranging from the Santos port authority, known as Codesp, to federal environmental regulator Ibama.

“For the civil work six months is more or less what has been presented, the problem is what’s behind that - the permits,” said Tarcilo Rodrigues, an analyst for Sao Paulo-based Bio Agencia consultancy.

Copersucar spent two years implementing a plan to double export capacity at Santos from some 5 million tonnes of bulk and 0.5 million tonnes of bagged sugar. The expansion, presented in 2011, was completed in June, just four months before the fire.

The company now has six separate sheds at the terminal at Latin America’s largest port, but counts them as five warehouses because two are half-sized at 17,500-tonne capacity.

Thus far, Copersucar has not even presented a rebuilding plan to Codesp and is still surveying the extent of the damage. Several Copersucar workers were analyzing a drain when Reuters visited and declined to be interviewed.

Help

The Rumo terminal operated by Cosan SA Indústria e Comercio , next door to Copersucar, is the only sugar terminal at Santos to have said publicly it was able to “help” its competitor with exports in the near term, but didn’t give details on how much of Copersucar’s capacity it could absorb.

Rumo is also currently waiting for regulatory approvals in order to increase its capacity at Santos.

According to Codesp, Rumo presented a 440 million reais ($201.8 million) expansion plan earlier this year, before the fire. The plan, which would increase Rumo’s annual capacity at Santos to 13 million tonnes, needs approval from waterway regulator Antaq and is not expected until 2015.

Copersucar and Cosan declined to comment.

Rodrigues, of Bio Agencia, said it would be nearly impossible for Copersucar to use its less damaged bagged warehouses to ship bulk sugar because the technology is different for storing and shipping the two products.

Only 3 percent of the sugar shipped from Santos, which ships 73 percent of Brazil’s sugar, is bagged.

Damaged Goods

Copersucar lost 180,000 tonnes of sugar to the fire and issued force majeure notices to third-party sugar traders that had contracted capacity at its terminal. The burned, highly flammable bulk sugar still needs to be trucked out of the damaged warehouses and returned to mills, which will try to recycle it.

When large stockpiles of sugar catch fire, a carbonized outer shell forms around the mound, a shield that prevents water and chemicals from snuffing out the blaze.

Copersucar hoped its 2013 export capacity would rise to 9 million tonnes from 7.2 million tonnes in 2012. Sugar exports are winding down for the current season in Brazil, the world’s biggest producer, and won’t pick up again until April.

Analysts are already warning of unprecedented wait times for ships to load at Santos, where vessels had, earlier this year, remained for up to 60 days to load soybeans.

Though the Copersucar warehouse destruction is clearly visible from the Santos estuary, on which privately run terminals have been built since the 1970s, its shiploading equipment and the public dock space appear to have been spared.

But viewed from the water, Copersucar’s terminal is an odd spot of idleness at the busy port. Next door, Rumo’s “spider ship loaders” pack sugar and nearby, the world’s largest orange juice terminal, Citrosuco, loads a giant juice shipment. (Reuters)