Cosan SA Partner Profile

Cosan SA: (continued)

Sugarcane is the primary raw material used in the production of ethanol and sugar. As of April 30, 2007, the company leased approximately 290,000 hectares (averaged 84.1 tons of sugarcane per hectare) through approximately 1,600 land lease contracts with various lessors. The company also purchases sugarcane directly from various third-party sugarcane growers.

The company’s annual ethanol production capacity is approximately 405 million gallons (1.5 billion liters). It produces and sells three different types of ethanol: hydrous ethanol and anhydrous ethanol for fuel and industrial ethanol. The primary type of ethanol consumed in Brazil is hydrous ethanol, which is used as an alternative to gasoline for ethanol-only fueled vehicles and for flex fuel vehicles (as opposed to anhydrous ethanol which is used as an additive to gasoline).

The company sells ethanol primarily through gasoline distributors in Brazil. These distributors include Petrobras Distribuidora S.A., Manancial Distribuidora de Petróleo, Ltda, Shell Brasil, Ltda., Esso Brasileira de Petróleo, Ltda., Texaco Brasil S.A. Produtos de Petróleo and Cia Brasileira de Petróleo Ipiranga. The company also sells bottled alcohol products, such as liquid and gel alcohol to consumers in the Brazilian market and industrial alcohol, which are used in the chemical and pharmaceutical sectors. It also exported refined hydrous ethanol for industrial purposes. The company’s primary clients are trading companies, such as Vertical UK LLP, Kolmar Petrochemicals, Cargill International and Cia. Importadora e Exportadora COIMEX, which distributes its products mainly to the United States, Japan and Europe.

The company produces various standard sugars, including raw sugar (also known as VHP sugar), crystal sugar and organic sugar, and refined sugars, including granulated refined white sugar, amorphous refined sugar, refined sucrose liquid sugar and refined inverted liquid sugar. VHP sugar is similar to the type of sugar traded in major commodities exchanges, including through the standard NY 11 contract. The company exports VHP sugar in bulk, to be refined at its final destination. It also sells an amount of VHP sugar to the Brazilian market. Crystal sugar is a non-refined sugar produced directly from sugarcane juice and sold to industrial companies in Brazil to be used as an ingredient for food products. The company also sells an amount of crystal sugar to the Brazilian retail market and to export markets. It sells organic sugar in the international and Brazilian markets.