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Adecoagro Commences The Construction Of Ivinhema Mill

Stocks in this article: AGRO

LUXEMBOURG, July 1, 2011 /PRNewswire/ -- Adecoagro S.A. (NYSE: AGRO), a leading agricultural company in South America, announced today that on June 27, 2011, it obtained the necessary environmental license to start the construction and assembly of the Ivinhema mill in the State of Mato Grosso do Sul, Brazil.

The new Ivinhema mill will be located only 45 km from the Angelica mill – Adecoagro's first greenfield project with 4.0 million tons of crushing capacity, which is already fully operational. Once Ivinhema is complete, both mills are expected to form a cluster with 10.3 million tons of crushing capacity and over 110,000 hectares of sugarcane plantation, enabling Adecoagro to capture significant synergies and economies of scale resulting from logistics efficiencies, integrated management and shared costs. The natural environment in this region offers excellent conditions for sugarcane production, enhancing Adecoagro's low cost production strategy. We expect Ivinhema to start operating in the first half of 2013, reaching its full nominal capacity of 6.3 million tons in 2017.

Ivinhema mill will be built with state-of-the-art equipment, including high pressure steam boilers and turbo-generators for cogeneration of electricity, high flexibility to shift production between sugar and ethanol, full mechanization of agricultural operations (planting and harvesting), and the ability to process certain by-products such as vinasse and filter cake into organic fertilizer for application on our sugarcane plantation. These technologies combined with our seasoned management team will enable Adecoagro to continue extracting the most value from each ton of sugarcane crushed. Adecoagro has already contracted the manufacturing of key equipment for an aggregate of $42.3 million and has planted 20,700 hectares of sugarcane near the Ivinhema mill site.

Adecoagro believes that this project will generate important economic and social benefits to the region. We expect to employ over 3,200 local residents and contribute to the development and welfare of the local communities. The project has been designed with the highest environmental standards in the industry.

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