The Group includes five operating companies, of which Cosan is the largest, and two land holding companies. All companies are privately held. Cosan started in 1936 with one sugar mill and in the following 67 years it grew mostly by acquiring and consolidating existing sugar mills. Cosan’s main shareholders are Indústria Açucareira São Francisco S/A., Irmãos Francheschi Administração e Participação S/A., Usina Costa Pinto S/A Açúcar e Álcool and Nova Celisa S/A. Mr. Rubens Silveira Mello controls 76% of Cosan’s voting shares through its ownership in Indústria Açucareira São Francisco S/A; Irmãos Francheschi Adminstração e Participação S/A; and Nova Celisa S/A.. Mr. Silveira Mello has over 30 years of experience in management of sugar companies and has been with Cosan for over 20 years.

Total project cost is estimated at $ 344.9 million and comprises the following components:

- acquisition of assets to support the Group''s growth strategy;
- investment in planting, modernization and maintenance of existing operations; and
- additional working capital.

The project will be implemented over the FY05 to FY07 period.

The proposed IFC investment is a $30 million A Loan for IFC’s own account and a $20 million C Loan.

70.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	70.0
Equity	0.0

* These investment figures are indicative

Cosan’s operations are located in the State of São Paulo, Center-South of Brazil, where all mills and agricultural operations are based, with the exception of a small sugar refinery located in the South. Brazil’s Center-South region has some of the best cane growing land in the world in terms of soil, topography and climate. As a result, this region has some of the lowest production costs in the world. This natural competitive advantage is compounded by the very large size of cane farms, efficient farming practices, long harvest season and large and efficient mills. Cosan’s headquarters are located in the city of São Paulo, capital of the State, and the management of industrial and agricultural operations is based in the city of Piracicaba, in the interior of the State.

The project will support the on-going restructuring of the highly fragmented and recently de-regulated Brazilian sugar/ethanol industry which can still achieve greater efficiencies, even as it remains the world’s lowest cost producer. Brazilian fuel ethanol exports contribute to the reduction of global greenhouse gas emissions by substituting fossil fuels with renewable energy. Cosan currently employs over 21,000 permanent and 5,000 seasonal workers. With the Project, these numbers are expected to increase.

IFC will provide long-term financing to support Cosan’s growth strategy and objective of accessing international capital markets. IFC would also:

- support the leading exporter of Brazil’s second largest agricultural export commodity;
- promote the use of cleaner, renewable fuel (ethanol);
- improve compliance of environmental and social standards; and
- strengthen Cosan’s corporate governance. IFC will also reduce Cosan’s financial costs.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

In view of the fact that this proposed investment is at the corporate level, environmental and social review of this project entailed an evaluation of a cross section of existing operations, which include the Costa Pinto, Rafard, Santa Helena, Univalem, Da Barra, Da Serra, Usati mills and the Port of Santos facility. Based upon discussions with engineering staff, remaining Cosan operations, which include San Francisco, Diamante, Dois Corregos, Junqueira, Ipaussu, and Gasa mills have similar operational issues and existing approaches to resolving the impacts listed below.

The review analyzed the following potential environmental, health and safety, and social impacts:

- Company mission and vision in the sector;
- Systematic management of quality, environmental and social affairs;
- Systematic management occupational health and safety;
- Control of air emissions to the environment;
- Management of liquid effluents;
- Management of non-hazardous and hazardous liquid and solid wastes;
- Control of pest species in cane rearing;
- Labor practices in cane rearing operation; and
- Social development programs.

The identified environmental, social and health and safety impacts which require ameliorative activities are summarized in a Corrective Action Plan (CAP) that Cosan will implement as part of IFC’s Loan Agreement. Upon successful implementation of the agreed mitigation measures, the proposed Project will meet Brazilian laws and regulations as well as the applicable World Bank/IFC environmental, social and health and safety policies and guidelines.
Location of environmental documents In locally affected community
The environmental documents will be available in the municipalities of the following locally affected communities:
- Piracicaba;
- Santos;
- Barra Bonita; and
- Araçatuba, in the State of São Paulo, Brazil, as well as Itajaí, in the State of Santa Catarina.

In each of these places the documents will be available at the Municipal Administration building (Prefeitura Municipal) where official notices (editais) are available for public review. The documents will also be available in Cosan’s web site (www.cosan.com.br).