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UPDATE 1-Brazil's Raízen to idle two sugar mills due to insufficient cane

(Adds details on mills, context on next cane season)

By José Roberto Gomes and Marcelo Teixeira

SAO PAULO, Nov 14 (Reuters) - Brazil's Raízen, the world's
largest sugar maker, will idle two mills in the main Sao Paulo
cane belt for an initial period of two years, saying there will
not be enough cane in the area where the plants are located to
justify operations.

Raízen, a 50-50 joint venture between Brazil's Cosan SA
Indústria e Comércio and Royal Dutch Shell Plc
, said in a statement on Tuesday that it will transport
the cane planted in the areas where the mills are located to
other plants it operates in the country.

The company, which is also Brazil's largest ethanol producer
and the second largest fuel distributor, said it will shut the
Dois Córregos mill, namesake of the municipality where it is
located, and the Tamoio mill, in Araraquara, both situated in
central Sao Paulo state.

In both cases, the installations being shut are not far away
from other plants Raízen has. Dois Córregos is close to Diamante
and Barra Bonita mills. Tamoio is near the Araraquara and Serra
plants.

"The idling is due to an outlook of reduced sugarcane
supplies in those regions and follows a strategy to optimize
logistics and production," Raízen said.

The company did not disclose the crushing capacity or other
production details from the plants that are being shut.

Raízen's decision happens days after its largest rival in
Brazil, Biosev, the sugar unit controlled by
commodities trader Louis Dreyfus, announced the
closure of a mill in Mato Grosso do Sul state.

The current crop marks the third consecutive fall in cane
production for Brazil's center-south, the world's largest sugar
producing region, as mills struggle to invest in cane fields
amid low sugar prices.

The region is expected to crush a crop next year similar in
size to the one processed this year, at around 580 million
tonnes.

But other regions in the world such as Thailand, Europe and
India have increased sugar production, leading the global market
to a supply surplus that pressures prices.
(Editing by Chizu Nomiyama and Marguerita Choy)

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