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INTERNATIONAL BUSINESS EXPANSION PLAN

INTERNATIONAL BUSINESS EXPANSION PLAN. ADNAN ANWAR NICHOLAS BIANCHI JENSON DUNN FAISAL RAZA ARTHUR URATANI. Assessing the Feasibility of Sugar and Ethanol Operations in Ghana. STRT 571-45 INTERNATIONAL BUSINESS ENVIRONMENT. SNAPSHOT OF GHANA. Population 23,387,000 Area 238,535 km 2

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INTERNATIONAL BUSINESS EXPANSION PLAN

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  1. INTERNATIONAL BUSINESS EXPANSION PLAN ADNAN ANWAR NICHOLAS BIANCHI JENSON DUNN FAISAL RAZA ARTHUR URATANI Assessing the Feasibility of Sugar and Ethanol Operations in Ghana STRT 571-45 INTERNATIONAL BUSINESS ENVIRONMENT

  2. SNAPSHOT OF GHANA Population 23,387,000 Area 238,535 km2 GDP $35.8 billion GDP per capita $1,500 Currency Ghanaian Cedi (GHS) Tropical climate Wet and Dry season • 28% of population live below international poverty line ($1.25/day) • Agriculture accounts for 37% of GDP with the sector employing 56% of workforce • Two-party democratic system • Independent central bank (Bank of Ghana)

  3. ADVANTAGE: GHANA • Political Factors • Two dominant but moderate political parties • Central tendency acts as strong deterrent to radical policy change • Relatively low perception of corruption for a developing country • Monetary Policy • International Monetary Fund (IMF) oversight • Inflation targeting framework • Fiscal austerity measures • Geography • Close proximity to Europe • Coastal country • Ideal climate for sugarcane cultivation Ghana Economic Free Zone Incentives • 0% tax rate for agriculture/industrial plant, machinery and equipment imported for investment purposes • Low upfront capital investment costs • 100% ownership of share by any investor • 0% tax on profits for 10 years; no greater than 8% thereafter • Guaranteed protection against expropriation

  4. OPPORTUNITY: EUROPE • The European Union (EU) has set a mandatory target of 20% biofuel incorporation by 2020 • Increasing disparity between biofuel demand and supply in EU member states TAKE A CLOSER LOOK BIOMASS ACTION PLAN (EU) • Further promotion of renewable energy sources • Security of supply and sustainable energy in Europe • Preparation for the large scale use of bio-fuels • Heightened cooperation with developing countries in the sustainable production of bio-fuels

  5. PRODUCTS Sugar – to serve Ghana’s demand Ethanol – to serve Europe’s demand Growing demand in Europe Imports originating in Brazil totaled approx. 400 million gallons in ‘08 • $530 million in sugar imports over the last five years • Upward trending regional demand of 2.3% per year • Energy Self-Sufficient: Sugar Byproduct (bagasse) can be burned as fuel Ghana – the perfect fit • Abundance of affordable labor • Food industry tax incentives • Savannah Accelerated Development Authority (SADA) have acquired thousands of hectares of land for varied agricultural initiatives including sugarcane • Government incentives for export-oriented industry • Low transportation costs to target market

  6. CARGILL CAPABILITIES AND EXPERTISE • 138,000 employees in 68 countries • Net earnings of $3.33 billion (FY ‘09) • Other revenues of $116.6 billion (FY ‘09) • Fourth largest biofuel producer in U.S. • Dedicated branch (Cargill Sugar) focused on sugar and ethanol opportunities • Environmentally certified with the International Organization for Standardization (IOS) RELEVANT EXPERIENCE • Sugar processing and ethanol production in Brazil • Footprint in Europe (biodiesel capabilities) • Existing operations in Ghana

  7. STRATEGY Greenfield Investment • 65,000 acres (43,000 acres for ethanol, 22,000 acres for sugar) • [Domestic Market Seeking] Full capacity of 352,000 metric tons of sugar per year (using average yield of 16 metric tons per acre) • [Cost Reducing / Resource Seeking] Full capacity of 26 million gallons of ethanol per year for export SUSTAINABILITY Economic Social Environmental

  8. DRAWBACKS AND RISKS TAKE A CLOSER LOOK THE SUGARCANE TRAP • Tradeoff between food and fuel • Limited arable land and water supply • Heightens fears of corporate greed Product Price Stability - future ethanol vs. petroleum prices Currency Risk – government activities suggest stabilization Energy Reliance – growing resistance to dependence on foreign fuels Corruption Risk – prior history, lack of transparency controls

  9. Sugar Prices

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