Sucre Ethique - Brazil BNDES freezes loans to sugar group Cosan

Reuters UK - jeudi 7 janvier 2010

Brazil’s state development bank BNDES said on Thursday it suspended loans to sugar and ethanol group Cosan after it was included on a government’s list of companies with workers in slave-like conditions.

Cosan (CSAN3.SA)(CZZ.N) is Brazil’s largest sugar and ethanol producing group and the world’s biggest cane processor.

The company was included in December on Brazil’s Labor Ministry’s black list, which is updated every six months, after inspectors found workers in irregular conditions in 2007.

In a statement, BNDES said it has decided to suspend "preventively" all transactions with Cosan, adding that new contracts with the bank would depend on the company’s exclusion of the list.

In a separate statement, Cosan said the workers had been hired by a third-party cane-cutting company that no longer works for it and that it would appeal from the ministry’s decision.

Cosan fell 5.33 percent to 23.46 reais on the Sao Paulo stock exchange on Thursday while the Bovespa index .BVSP slid 0.39 percent.

In June, the company obtained a loan of 788 million reais ($452 million) from BNDES, to be used mainly to build a new sugar and ethanol mill in Goias state.