February 27, 2014 Updated: February 28, 2014 14:29:00
Mubadala and Trafigura Group have completed their acquisition of a controlling stake in a Brazilian iron ore port terminal from MMX Mineração e Metálicos, in a deal worth approximately US$955 million.
Mubadala, the strategic investment company of the Abu Dhabi Government and Trafigura, the world’s second-largest metal trader, announced a deal to acquire a 65 per cent stake in Porto Sudeste from MMX in October, after signing a memorandum of understanding to that effect in September.
The deal involved Mubadala and Trafigura (through its Impala subsidiary) paying $400m for the shares in Porto Sudeste, a major iron-ore port terminal located in Itaguai, Rio de Janeiro state.
The two parties will also assume approximately 1.3 billion reais (Dh2.03bn) of Porto Sudeste’s debt.
MMX, owned by the beleaguered Brazilian tycoon Eike Batista, retains a 35 per cent interest in the port as part of the agreement.
An MMX spokeswoman said that the deal was concluded yesterday afternoon UAE time.
“This is a positive transaction for Impala, Mubadala Development Company and MMX,” said Mariano Marcondes Ferraz, a member of the Porto Sudeste Consortium Board.
“Improving Brazil’s infrastructure benefits all stakeholders in the iron-ore industry. Once fully operational, Porto Sudeste will provide additional capacity, improve access to export markets for iron-ore producers and unlock Brazil’s production overall.”
A Mubadala spokesman declined to comment on the deal.
Porto Sudeste is designed to handle 50 million tonnes of iron ore per year, with future expansion to 100 million tonnes per year.
Construction work on the port began in July 2010, with commercial operations expected to begin in the third quarter of this year.
Mubadala’s association with Mr Batista dates back to March 2012, when the company announced a $2bn investment in his EBX Group. Mr Batista, at the time one of the world’s richest men, has experienced a dramatic reversal of fortune, forcing him to sell of many of EBX’s choice assets.
Porto Sudeste was a particularly attractive target for investors, given the shortage of capacity at ports servicing the country’s iron mining industry, according to a São Paulo based banker.
“All the ports that are able to handle iron are operating at close to full capacity, to the extent that they’re auctioning off spare capacity at high prices,” he said.
“In the sense that it’s a port connected to a logistics base it’s a great asset.”
MMX’s shares rose by as much as 10 per cent in early trading yesterday on the São Paulo stock exchange.
News of the deal came as Brazil’s government statistics agency, IGBE, announced that the country had avoided a recession last year because of better-than-expected growth in the fourth quarter.
The economy grew by 0.7 per cent in the fourth quarter, compared with a 0.5 per cent contraction in the third quarter, meaning that the country’s economy grew 2.3 per cent during the year.
However, industrial output fell 0.2 per cent during the fourth quarter, dragged down by a 0.9 per cent fall in manufacturing compared with the third quarter, highlighting the fragile state of the country’s economy.