Trafigura and Abu Dhabi's Mubadala to Acquire Brazilian Iron Ore Port for $996 Million

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Logistics and energy company Trafigura Beheer BV (Lucerne, Switzerland) and sovereign wealth fund Mubadala Development Company (MDC) (Abu Dhabi) will acquire the Brazilian iron port of MMX Porto Sudeste Ltda (MMXPSL) for $996 million from Brazilian billionaire Eike Batista's mining company MMX Mineracao e Metalicos S.A. (BVMF:MMXM3). The acquisition is being driven by the global iron ore trade and the rapid growth of the steel industry in the Middle East.

Trafigura will hold a 65% stake and MDC a 35% stake in the port, which is under construction. Trafigura and MDC plan to invest $400 million in the project to complete the port and iron ore terminal, and will assume $596 million in debt from MMX Sudeste Mineracao S.A., a subsidiary of Batista's EBX Group. The partner also will provide the subsidiary with a $100 million trade finance facility. A pre-condition of the approval of the whole transaction is the availability of financing to match the structure of the deal.

The iron ore terminal in Rio de Janeiro will have an initial handling capacity of 50 million tons of ore annually. The port is expected to begin commercial operations in mid-2014, with development plans to increase handling capacity to 100 million tons annually. The port is designed to handle cape-size vessels.

For related information, see April 16, 2013, article - WSA Predicts Middle East/North Africa Region to See Sharp Growth in Steel Demand in 2014.

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