Amaggi Sustainable Cotton

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 Amaggi (“Amaggi” or “the Group”) - https://www.amaggi.com.br/ - founded in 1977, is one of the leading producer, merchandiser, crusher, and exporter of grains in Brazil. In 2019, Amaggi traded approximately 15.8 million tons of grains (mostly soybeans and corn.) Amaggi’s operations are distributed in four (4) business areas: (i) Amaggi Agro, (ii) Amaggi Commodities, (iii) Amaggi Logistics and Operations, and (iv) Amaggi Energy. Amaggi Agro is responsible for the agricultural production of soybean (commercial grains and seeds), corn, and cotton on Amaggi’s 13 owned farms (99.6% of Amaggi’s farming) with approximately 259,000 planted hectares (ha) in the 2019/2020 crop year of which 170,000 ha were planted in the first harvest and 89,000 ha in a second harvest. Its farms are located in Querência, Sapezal, Rondonópolis, Itiquira, São Felix do Araguaia and Campo Novo do Parecis;  Amaggi Commodities deals with the purchase and sale of grain (soy and corn), cotton and fertilizers and the import and sale of agricultural inputs. Amaggi has an established financing relationship with approximately 10% (around 500) producers, 30-35% is purchased through forward contracts, and 40-45% is purchased through the spot market, where Amaggi buys the grains during or after the harvest. It has 29 warehouses, of which, it owns 28  and leases 1 ; they are located in Mato Grosso (MT), Rondônia (RO) and Amazonas (AM), with total storage capacity of approximately 2.1 million tons of grain per year located in the export routes, in port terminals, or crushing plants.  As part of this business area, Amaggi also has a joint venture with Louis Dreyfus (LD) and Zen-Noh, Amaggi Louis Dreyfus Zen-Noh (ALZ) Commodities, to originate and commercialize (soybeans, corn and inputs), from the states of Maranhão, Tocantins, Piaui and Bahia (MAPITOBA) through the Madeira Corridor (Northwest Export Corridor) for which it uses the port Terminal de Grãos do Maranhão (TEGRAM). This port is a consortium of four companies (including ALZ-TP);Amaggi Logistics and Operations handles the soybean crushing plants; water, road, and rail transportation; port terminals; and the fertilizer mixing factory. It has three soybean crushing units, including (a) a Genetically Modified Organism (GMO) 1,200,000 ton/year capacity crushing plant located in Lucas do Rio Verde (MT), (b) a non-GMO 630,000 ton/year crushing capacity plant in Itacoatiara (AM), and (c) a non-GMO 450,000 ton/year located in Fredrikstad - Norway. The crushing plants produce soybean meal and soybean oil. Through its logistics business Amaggi offers transport and port related services for commodities and agro production, as well as for third-party customers, which represented 9.3% of the volume transported by Amaggi Logistics and Operations segment during the nine-month period ended September 30, 2020. Amaggi Logistics and Operations owns and operates, either directly or through joint ventures (with, among others, Bunge Brasil S.A., or Bunge, Rumo S.A., or Rumo, Louis Dreyfus Company, or LDC, and Zen-Noh Grain Corporation, or ZGC): (i) three transshipment ports with an aggregate capacity of 12 million tons of grains; (ii) five elevation ports with an aggregate capacity of 25 million tons of grains, including the Terminal Granéis do Guarujá Corridor (TGG), the largest private grain terminal in Brazil; (iii) one port terminal in Fredrikstad, Norway; and (iv) two river navigation fleets in Brazil, based in Itacoatiara, State of Amazonas, and Barcarena, State of Pará, consisting of 191 bulks and 21 pushers; Amaggi Energy is focused on hydropower and solar power generation. It generates power from five Small Hydroelectric Power Plants (SHPs), located in the municipalities of Sapezal and Campos de Júlio; four on the Juruena river and one on the Formiga river, all in MT. They operate by “run-of-river”, thus not depending on large dams, with minimum residence times, and not sustaining large flooded areas. The SHPs are integrated into the National Energy System and generate approximately 70 MW/h. Amaggi’s energy needs are satisfied through its own self-generation, which correspond to 72% of its total production. The remainder 28% generated is sold to the national grid. Early in 2020, Amaggi built 2 photovoltaic plants with a power of 79.94 KWp each totaling 159.88 KWp and projected total annual generation of 245,688 KWh (supplier data) and servicing 14 Amaggi consumption units. Agropecuária Maggi built 4 photovoltaic plants with unit power of 130.67 KWp totaling 522.68 KWp and projected total annual generation of 803.232 KWh and initial service to 28 consumer units of Agropecuária Maggi. Four of Amaggi’s own 13 farms, namely Itamarati, Tucunare, Tanguro and Agua Quente produce cotton as a second crop. All of them have cotton processing plants within their premises; however, the Tanguro cotton processing plant, still under commissioning process will be fully operational during the next cotton harvest season, in July 2021.  The proposed project includes an IFC investment of up to US$180 million A/B/MCPP Loan package. The financing will support its three-year Amaggi cotton investment plan comprising : (i) conversion of existing corn farmland into cotton production across three farms in Mato Grosso; (ii) construction of cotton processing units to serve the increased cotton production volumes and financing of the three operating cotton production facilities; (iii) investments in logistics assets for the cotton expansion and agricultural inputs for use in the cotton farms; and (iv) crop protection/treatment inputs for productivity improvements in existing cotton farms (“The Project”). Specifically, the proposed project will: (i) expand the existing cotton plantation area from 65,000 ha to 103,000 ha distributed among the Itamarati (69%), Tucunaré (26%) and Agua Quente (5%) farms by further replacing corn, which is currently planted as a second crop, by cotton. Thus, as part of this expansion, the company is improving soil conditions, acquiring specific equipment for cotton planting and harvesting (i. e., trucks, sprayers, medium tractors, forklifts, etc.), and improving structures for cotton processing; and (ii) construct a new 147,600 bales/yr cotton processing plant, Algodoeira Itamarati, in a 9,600 m² area within Amaggi’s Itamarati farm. This plant anticipates producing approximately (a) 32,000 tons/year of cotton plumes, (b) 40,000 tons/year of cottonseed, and (c) 800 tons/year of fibrilha.The 85,315 ha Itamarati farm is in Campo Novo do Parecis, MT, its closest communities are the municipalities of Tangará da Serra (60 km) and Campo Novo do Parecis (73 km) and separated by the river Utiaritiit. It is also located 22km North-West distant from the Indigenous People (IP) Land Paresi and 14km distance South-West from IP Land and Protected area Rio Formoso. The 44,583 ha Tucunare farm is located in the municipality of Sapezal, its closest community is the city of Sapezal at 12 km and it is also located 56km West distant from the Utiariti IP Land, 48km South distant from the Pareci IP Land, and 58km West distant from the Nambiquara IP land. The 87,067 ha Tanguro farm, located in the rural area of the municipality of Querência/MT, its closest community is the city of Querencia at 33 km and is also distant 28km North-West from Xingu IP land and 42 km West from Pequizal do Naruvôtu IP land.  The 20,474 ha Agua Quente farm is in the municipality of Sapezal, its closest community is the city of Sapezal at 30 km; it is also distant 22km East from the Utiariti IP land and 17km South from the Pareci IP Land.