Brazil
I always look at Brazil for technology and R&D about sugar cane and related product.
In Brazil sugar cane is considered an ENERGY CROP, most profitable products are ETHANOL and ELECTRICITY from bagasse/biomass. SUGAR is often a SECONDARY PRODUCT
Sugar (risks)
Sugar is a commodity, with price now stable and production constantly increasing. A drop in price is possible. STEVIA is soon becoming a more affordable option in the food industry, and the cost of sugar can be soon benchmarked to STEVIA. Health organization worldwide are NOT promoting the consumption of sugar.
Etanol (risks)
Etanol is strictly depending on CRUDE OIL price. Ethanol in Thailand is mainly used as car fuel. With the lower price of CRUDE OIL, drivers will prefer the regular GASOHOL instead of E20 and E85. There is a real possibility of OVERSUPPLY if price of CRUDE OIL remains under $100 per barrel
Electricity co generation
It is the most profitable activity, but today limited to the availability of bagasse. MITR PHOL is already using other type of biomass to burn when the stock of bagasse is finished (rice straw).
IMPORTANT to produce electricity all year around. There will never be OVERSUPPLY of electricity in Thailand. Electricity always in demand.
Biomass harvesting
Sugar cane leaves is a readily available BIOMASS for Erawan. If sugar cane are harvested with machine, the leaves remains on the field and can be collected, baled, stored and later BURNED at the sugar mill, to produce ELECTRICITY. This technology already exist in Brazil, and is successful.
Example: 7 harvesters. Cut 140,000 ton of cane per season. Leaves on field are 10% of weight.14,000 ton of biomass ALREADY available for ERAWAN, just collecting the leaves.
Erawan profile, Erawan Supply
Erawan is a very large sugar mill, with 4 million ton of cane crushed per year, every improvement in the Co-generation of electricity can be cost effective (volumes, economy of scale). Erawan Supply has one of the LARGEST FLEET of trucks in Thailand. THESE TRUCKS CAN BE USED SUCCESFULLY FOR THE MOVEMENT OF BIOMASS , when the harvesting season is off (May to October) to provide BIOMASS for the power generating unit.
Erawan does not have experience with Etanol yet. Sales of Etanol in time of oversupply can be very difficult, since the only buyer (PTT) decide independently where to buy from. In the past some Etanol plant were shut down for lack of demand (TSI, Tamaka).
My friendly advices for Erawan:
ETANOL factory: secure the EIA approval to build the factory (do not let expire) but consider other option than PRAJ (50 million $) . A second hand Etanol factory in Brazil would cost MAX 10 million dollar, and benefit of the BOI priviledge same a as a new one. There is a real risk to shut down the future new etanol factory for lack of demand. 50 M$ investment sitting idle is painful You can start with a second hand plant and then EXPAND when the demand picks up. For now, minimum investment on Etanol, just to secure the license.
Electricity co-generation: study the possibility of running all year around. In a second step, consider to EXPAND CAPACITY. Collecting BIOMASS is critical. Technology exists, but still developing. I know for sure that MITR PHOL is going in this direction. Actual government will support any investment to use biomasses to produce electricity, and public money may be avialable.
Investor interest
In case ERAWAN wants to list in the stock market , investor will be mostly interested in the energy side of the business, more than the sugar production.
Erawan to be interesting for investors must show ability to produce Electricity and Ethanol. Ability and technology to use BIOMASS available near the factory area is surely the most important aspect.
Investor will also look at the “bottom line” (return on investments). They will not consider if the Etanol factory or the sugar cane harvester is new or second hand, but HOW LONG will take the Return on Investment.
Available always for further explanation, thank you for reading