Shell to Invest $667M in Brazil’s Struggling Sugar and Ethanol Producer Raizen

London-listed oil giant Shell has committed to investing 3.5 billion Brazilian reais (approximately $667.84 million) in Raizen, the Brazilian sugar and ethanol producer facing financial difficulties. The announcement was confirmed on Tuesday by Cristiano Pinto da Costa, CEO of Shell Brazil. The investment is expected to support Raizen as it navigates mounting losses, rising debt, and operational challenges caused by adverse weather conditions affecting crop production.

Raizen, a joint venture between Shell and Brazilian conglomerate Cosan, has reported consecutive quarterly losses along with a sharp increase in net debt. The company’s aggressive investment strategy combined with poor weather impacting sugarcane harvests has significantly weakened its financial position. In February, Raizen warned investors about “significant uncertainty” surrounding its ability to continue operating without additional financial support.

Reports from Reuters last week indicated that Shell planned to inject 3.5 billion reais into the struggling company. Sources familiar with the matter suggested that the contribution from Shell could be substantially larger than the funds expected from Cosan, Raizen’s other major shareholder. The potential imbalance in capital contributions has raised questions among investors and market observers about the long-term strategy for stabilizing the company.

According to Reuters, Raizen’s creditors have also expressed dissatisfaction with a proposal by BTG Pactual. The investment bank manages a fund that joined Cosan’s controlling shareholder group last year. The proposal suggested splitting Raizen into two separate entities by separating its fuel distribution business from its ethanol production, refineries, and other industrial assets.

However, Shell appears to favor keeping Raizen intact for now. Costa stated that the company believes maintaining Raizen as a single entity will provide better strategic stability during the recapitalization process. He added that Shell expects another shareholder to contribute an additional 3.5 billion reais to help strengthen Raizen’s financial position.

While a future corporate split remains possible, Costa emphasized that any structural changes should only be considered after the recapitalization is completed and the company regains financial stability.

Meanwhile, Brazilian newspaper Valor Econômico reported that Cosan may not inject additional capital into Raizen. Instead, the report cited unnamed sources claiming that Cosan founder and controlling shareholder Rubens Ometto could personally invest 500 million reais in the company through his family office, Aguassanta.

Shell’s investment signals a significant effort to stabilize Raizen, one of the world’s largest producers of sugarcane ethanol and a key player in Brazil’s renewable fuel sector. The move highlights the importance of Raizen within the global energy transition and the growing role of biofuels in reducing carbon emissions.