Walmart Won’t Buy Cosan Sugar Amid Slavery Blacklist

By Helder Marinho and Lucia Kassai

Jan. 8 (Bloomberg) -- Wal-Mart Stores Inc., the world’s biggest retailer, suspended a supply contract with Cosan SA Industria & Comercio after the Brazilian sugar maker was added to a government slavery “blacklist.” Cosan said it won an injunction ordering it be removed from the list.

Walmart is the first retailer to come out with sanctions against Cosan after the sugar producer was added Dec. 31 to a Brazilian Labor Ministry’s list of companies whose workers operate in slave-like conditions. Walmart’s local unit said it temporarily suspended purchases of Cosan’s Acucar Uniao and Acucar da Barra sugar brands.

Walmart “vehemently repudiates any practice that does not respect human rights,” the Bentonville, Arkansas-based retailer said in a statement.

Walmart’s move follows a decision by Brazil’s national development bank BNDES to cut off Cosan from financing. The inclusion on the blacklist means Cosan isn’t eligible for new loans and won’t receive future installments of agreed-to financing, BNDES said yesterday in a statement.

‘Mistake’

Cosan climbed today in Sao Paulo trading after Agriculture Minister Reinhold Stephanes called the company’s inclusion a “mistake.” Cosan rose 0.9 percent to 23.67 reais, after earlier increasing as much as 3.5 percent.

“Cosan had problems with a contractor three years ago and solved them immediately,” Stephanes said. “It has good practices.”

The slavery blacklist is managed by the Labor Ministry. Stephanes suggested Cosan and Labor Ministry officials meet to discuss its removal from the blacklist.

The Labor Ministry said 42 Cosan workers were found and “liberated” from conditions analogous to slavery. Another 163 employers are also on the ministry blacklist, which was created in 2004 and is updated every six months.

Petroleo Brasileiro SA’s fuel distribution unit, which buys ethanol from Cosan, may consider “restrictions” on the company, a BR Distribuidora spokesman, who couldn’t be named because of company policy, said yesterday. Petrobras is Brazil’s state-controlled oil producer.