A Sugar Cane plantation is started based on good quality seed obtained from a selected, well managed and plague/disease-free sugarcane field.

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Production Process Field General data on the cultivation of sugarcane Sugarcane (saccharum officinarum) is an annual grass involving two stages in a plantation: the sugarcane plant, which corresponds to the cycle comprised between sowing and the first cut and sugarcane ratoon, which begins after the first cut and ends with the last (perhaps five or more of such) before a new sowing takes place something that is referred to as renewal. Sugar processing is divided into two stages: field and plant. The San Carlos sugar mill is located in the province of Guayas, within the sugar cane growing zone on the Ecuadorian coastal plains, at an average altitude of 35 meters above sea level. Its current area comprises approximately 22,979 hectares spread over three districts of such province: Marcelino Maridueña, Naranjito and El Triunfo. Based on meteorological stations scattered along various areas of the plantation, it has been determined that average temperature corresponds to 25 C, with a maximum of 34 C, and a minimum of 18 C. Annual rainfall corresponds to 1400-1500 mm (January through April), with 710 hours of sunshine per year. Crop Management A Sugar Cane plantation is started based on good quality seed obtained from a selected, well managed and plague/disease-free sugarcane field. The quality of seed ensures a high percentage of germination of all buds in order to have a sound beginning for the new sugarcane crop. Because of the importance it has, all seed receives thermal therapy aimed at eliminating any pathogen that could impair the production potential of the crop. Land preparation prior to planting enhances the presence of loose soil where seeds can germinate and develop. A GPS is then used for land furrowing. Distance between furrows corresponds to 1.5 meters. Seeds are lodged at the bottom of such furrows and the first fertilization takes place at the time of covering seeds with soil and performig the first irrigation. Until 2003, ISC had been divided into management units (canteros) with an average extension equivalent to 40 hectares; later on, canteros were subdivided into 126 ha. plots in average. From then on, all field data were collected by plot. Soil samples and leaf tissues were taken per plot in order to analyze the content of nutrients at our Field Laboratory. From this point on, a fertilization plan is designed for each plot depending on soil fertility, texture, sugarcane variety and projected production in order to optimize the efficiency in the use of resources and inputs.

ISC uses gravity-based irrigation techniques. In determining the point at which the plant needs to be irrigated, the field department uses a model known as water balance (WB). Contribution and losses of water due to climatic factors are quantified at sub-stations, which are measured on a daily basis. This information is regarded along with the type of soil, weather and age of sugarcane plant, since these are factors determining the use of cropping water. The crop usually provides for favorable habitats for a number of insects that can reach the level of significant plagues, thus causing large losses in production. Keenly aware of this fact, the Field Department prepares an integrated plague management plan (IMP), a strategy we use to perform physical, mechanical, chemical, biological, genetic and growing controls. In order to boost biological control, natural enemies are introduced for the plagues identified. Harvest Harvest takes place 13 months after the crop has been planted, when dealing with a new plantation or sugarcane plant and 12 months after the first cut known as ratoon. Once the crop has reached an appropriate age, it is either manually or mechanically cut. Preparation of sugarcane for harvest begins with the application of ripening agents in order to increment the contents of sucrose; this takes place between 7 and 9 weeks prior to the cutting date. Once the plot has reached appropriate age, sugarcane from such cantero is cut manually by using machetes. Cutters work in couples, with each couple cutting six furrows comprising a sleeve ; sugarcane from the sleeve is then placed at the center of the six furrows, forming a roll from where it is lifted by fillers and placed onboard trucks or carts that transport the product to the manufacturing plant. With mechanized harvest, sugarcane is cut, chopped, cleaned and placed directly by hoppers on the truck or cart located and running in parallel to the harvester. Manual Cutting Machetes are used for manual cut and cutters are grouped together in couples, each couple cuts six furrows comprising a sleeve ; sugarcane from the sleeve is located at the center of six furrows, in the form of a roll which is then lifted by fillers and placed on trucks or carts that transport the produce to the plant. Mechanized Harvest During mechanized harvest (through the use of harvesters) sugarcane is cut, chopped, cleaned and directly placed on the truck or cart that is located and runs in parallel with the harvester. This type of harvesting is more efficient because waiting time is reduced between cutting and transportation to the plant. Processing Sugarcane thus harvested in the field is transported toward the plant by trucks. The produce is weighed and distributed toward mills. Ingenio San Carlos owns two tandem mills with the respective turners.

Once sugarcane is received at the mills (trapiches), the first thing done is to wash the produce in order to remove soil and dirt from the fields. Sugarcane is then chopped and actually shredded. The more thorough the shredding process is the best extraction work will be performed by mills and yields will be improved. During this process sugarcane is only chopped but juice is not yet extracted since pressure is required to that end. Chopped sugarcane is transported through a conveyor belt toward the mills in order to extract the juice through the use with compressors. Juice thus extracted is pumped into the processing plan for disinfection and clarification. This mixed juice is still dirty since it contains soil, sand, residues and other impurities that need be clarified before it can be used in the processing per se. Disinfection of Juice Disinfection is attained by ejectors that destroy pathogens, bacteria and microbes present. Sulfation then takes place simultaneously to reduce ferric salts (brown colored) and ferrous salts (light red in color) present. This favors further clarification of juice. At this stage it is important to maintain the ph of juice as close to neutrality as possible in order to prevent the destruction of sucrose. Juice thus neutralized is referred to as limed juice. Clarification of Juice Once the juice has been disinfected, the rest of impurities such as soil, sand and other solid impurities are separated from the juice via a sedimentation process. Precipitation of solid impurities is more efficient if performed while warm; hence, the limed juice is heated to no more than 230 F; if this temperature is exceeded, sucrose molecules are destroyed and an irreversible darkening reaction takes place simultaneously, giving way to highly colored sugar (sucrose) crystals. After warming, a flocculant is added to group flocs of solid and insoluble impurities present; since the latter are heavier than juice, they tend to sediment. Something similar albeit faster takes place when dirty river water is left in a glass and one can see that soil slowly precipitates to the bottom. The separation of suspended solids is achieved through the use of equipment known as clarifiers. Clean and brilliant juice is obtained in the upper portion (the clarified juice ) and a mud is deposited at the bottom of the equipment containing all solid impurities (soil, sand, lime residues and residues of flocculant). This mud is referred to as cachaza.

Filtering of Cachaza Since cachaza has been in contact with juice, this mud does contain juice that needs to be recuperated. This process is fulfilled through the use of rotational vacuum-filters with the following aftermath produce being: a) Solid cachaza cakes having nutrients, which are used as fertilizer in sugarcane plantations. b) A dirty juice known as filtered slush is fed into the juice clarifier to separate solid impurities, with the resulting juice being re-circulated and incorporated into the process. Evaporation of Clarified Juice Clarified juice is then sieved into the evaporation section to eliminate a large portion of water contained in the juice. This clarified juice possesses approximately 82-87% of water content. Through the multiple-purpose boilers the content of water is reduced to 33-40% (60-67 Brix), rendering a produce that is called meladura (or a heavy syrup).

Processing Plant The sugar manufacturing process beginning with sugarcane: Harvest/ Field Scale/ Weight Sugarcane Preparation Extraction/ Sugarmill Syrup A & B/ End Syrup or Molasses Power Generation Bagasse Centrifugation Harvest/ Field Clarification Clarified Juice Raw/Mixed Juice Sugar Cooked Mass Crystalization Containers Heavy Syrup Evaporation Drying Packaging Warehouse Dispatch Crystallization and Centrifugation Insoluble solids present in the heavy syrup (meladura) pose an undesired problem; hence meladura is fed into a clarifying equipment for floating the syrup in order to minimize this risk and obtain a clearer syrup that can be used as raw material; this process significantly contributes toward obtaining good-quality sugar. In order to attain sugar crystals (sucrose), water needs to be eliminated from the meladura. This is performed while templates are cooked in containers referred to as tachos. These are none other than simple vacuum evaporators. Using a three-template system, three types of cooked masses are produced referred to as A, B and C templates. A

corresponds to commercial sugar and the other constitute internal processes aimed at obtaining a final syrup or molasses having a low sucrose content In order to prepare A templates, the mass is concentrated through to 91 92 Brix. Upon reaching this concentration, the template or cooked mass is unloaded into crystallizing containers. In order to attain the separation of crystals present in the template, first-rate centrifuges are used. The crystals thus separated are known as A sugar; i.e., commercial sugar, and the resulting syrup is called A syrup which is re-circulated on the Bottom Tachos for internal exhaustion, Drying and Packaging Once the centrifuges are unloaded, A sugar is dried via a rotational dryer. Dry sugar is then conveyed toward storage hoppers for later packaging in 3-layered kraft paper bags. During the filling operation, a strict control of weight is performed. The produce thus packaged is immediately transported to Sugar Warehouses for storage and delivery to clients. White sugar is also packaged in plastic bags weighing 250 g, 500 g, 1 kg, 2 kg and 5 kg. Cogeneration As is true with every contemporary business, San Carlos has sought to diversify its industrial procedures and income, taking advantage of the resources being generated from the main line of their business. Sugarcane bagasse (renewable biomass) is burnt in boilers for the production of steam and electric power required for the industrial processing of sugar, and the surplus is channeled into the national electric power grid. In November, 2004, the Electric Concession Contract entered into with CONELEC (National Electric Power Council of Ecuador) authorizes us, as agents of the electric power market to generate and sell this energy. Implementation of this project has turned San Carlos into the first Ecuadorian company capable of generating and selling renewable resources-based electric energy; i.e., clean energy. A benchmark has in this manner been attained in the development of energy projects that are in tune with an ongoing conservational commitment. Once the equipment had been installed and proven, approval was granted by the national Energy Control Center CENACE (the technical/commercial regulating entity of the Ecuadorian electric market). This has enabled incorporation of our generation central into the National Interconnected System. Hence, at 00h00 of Saturday, 11 th December, 2004, we started delivering energy to the Wholesaling Electric Market (M.E.M. by its Spanish acronym), with total sales reaching 1759,516 kilowatt-hours until the end of the 2004 zafra (sugarcane harvesting season and a 4-week production period). In this manner, San Carlos has set a new record in the history of the Ecuadorian sugar-producing industry.

ISC ISC processes 12,000 metric tons per day approximately 2,000,000 tons per zafra, rendering between 3,800,000 and 4,000,000 50 kg-bags per year. San Carlos exports renewable biomass-based energy (bagasse) in the order of 10 MW during the zafra. At present, an expansion project is underway concerning co-generation in order to improve this energy exporting capacity to 35 MQ beginning in July, 2014. San Carlos is a modern industry having a high level of automation, reaching approximately 90% of the industrial plant. Its ongoing effort at modernizing strives to attain ever-increasing efficiency, quality and safety; it has: Electric drives for mills Sulfation operations by ejectors with zero environmental contact Expeditious clarifiers EVTL Evaporators High-efficiency ongoing containers (tachos-sole equipment of this type in Ecuador) Vertical crystallizer (sole equipment of this sort in Ecuador) Automatic zero-supervision centrifuges Ash-washing systems in boilers in order to control emission of same Closed water circulation system allowing for minimal consumption of this important natural resource.