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Cosan’s mining project to start operating by 2025

Cosan (CSAN3) É Favorável a IPO da Raízen Antes da Compass

JV Mineração, Cosan group’s new mining project in partnership with businessman Paulo Brito, will start operating as of 2025 with about 10 million tonnes of ore a year, according to the company’s plans. Reserves are initially expected to reach at least 2 billion tonnes, but the figure is expected to grow.

The joint venture plans to explore at least three mineral projects in the northern state of Pará. The first is near Parauapebas, in the Carajás region.

“We have already done surveys in almost 50,000 [square] meters in the region and we intend to do so in more 80,000 [square] meters next year. Today, we can already say with a lot of confidence that we have 2 billion to 3 billion [tonnes] of mineral resources to transform into mines. With the surveys, we expect this number to grow reasonably,” said Juarez Saliba, the executive at the head of the new company.

The idea is to seek market niches, through the production of high-quality iron ore, aimed at markets that pay higher premiums. “We will produce a very high-quality ore, with iron content above 67%,” he said in a conference call with analysts Tuesday, one day after the announcement of the new project.

The ore will be transported through Estrada de Ferro Carajás, operated by Vale, to the port of São Luís, also acquired by Cosan, to fully integrate the JV Mineração project. The port terminal, which is private, is expected to be acquired for R$720 million. Today, the asset is controlled by China Communications Construction Company (CCCC), with a 51% stake. The remaining 49% belonged to WPR, an infrastructure company of the WTorre group, and Lyon Capital.

The company is stitching together an agreement with the Chinese company, and executives say that a deal with all partners is advanced. The plan is that CCCC will continue to be responsible for the construction of the port from scratch – the group was unable to start the works after laying the foundation stone in 2018.

The terminal is considered an essential part of the mining project. “The port makes it possible to enter a segment that has an entry barrier, which is the export of production. If you look at the history of the segment, the challenge has always been to find a way out under competitive conditions,” said the group’s CEO, Luis Henrique Guimarães.

Once built, the port will have a minimum capacity to handle 50 million tonnes a year, but the volume can go well beyond this level. “The port will be built with a structure for four docking berths, which will provide a very high capacity. We will build it as the mine’s production moves forward,” Mr. Saliba said.

At first, the port will only be used to handle iron ore. In the initial project, CCCC intended to include grain terminals, which is not in Cosan’s plans at this time. The group has yet to close the deal for the construction, so it has not yet disclosed the final cost, but it was estimated at around R$2 billion in the previous project.

Financing will not be a problem and the arrival of a financial partner is a possibility, the executives say. “We have a reasonable amount of time to solve the funding equation. We have already started to work on a funding scenario, which will not be a challenge,” said Cosan’s CFO, Marcelo Martins. “We have a permanent financial discipline. We will bring in other investors if necessary or, perhaps, even if we have 100% of the resources available,” he said.

JV Mineração is the first of other projects that Cosan intends to launch. For this, the group has formed an investment arm, with a fund structure, which will house the new businesses.

The company chose this structure to gain more flexibility and agility, both in attracting partners and in divestments. Another objective is to draw a clear difference between the new businesses and the group’s traditional assets, which make up its “permanent portfolio” – Rumo (logistics), Raízen (energy), Compass (gas) and Moove (lubricants). The companies that come within the new structure will have a shorter horizon, the CEO said.

Source: Valor international

https://valorinternational.globo.com/

Cosan buys port, enters mining sector

Cosan já está discutindo potencial IPO da Raízen com Shell, diz diretor  financeiro

The Cosan group, owned by businessman Rubens Ometto Silveira Mello, announced on Monday the first step to enter the production and transportation of iron ore. The company acquired 49% of the port of São Luís, in Maranhão, and is expected to form a joint venture with businessman Paulo Brito, founder of Aura Minerals, to be an “integrated iron ore player.”

Through subsidiary Atlântico Participações, Cosan acquired 49% of the port of São Luís — the group made a binding proposal to keep 100% of the business, valued at R$720 million. The port is controlled by the Chinese group China Communications Construction Company Limited (CCCC), with a 51% stake. The remaining 49% belonged to WPR, the infrastructure company of the WTorre group, and to Lyon Capital, founded by Paulo Remy.

The acquisition will be the first move for Rubens Ometto’s group to start building its mining project. Through the memorandum of understanding, Cosan also entered a partnership with Grupo Paulo Brito, owned by the founder and controlling shareholder of Aura Minerals — the company will not be part of the business

Cosan will form a joint venture with Mr. Brito for the exploration of iron ore, which should be transported through the São Luís port, under the name JV Mineração. “This MoU provides that Atlântico will hold 37% of the total capital and shared control of the new combined company, that is, 50% of the common shares, after the port and cash contribution, depending on capital calls by the company’s management,” the group said in a notice of material fact distributed to the market. Paulo Brito and his partners in the group will hold 63% of the business.

According to the statement, JV Mineração will be an integrated mining and logistics company, which will own, in addition to the port, exploration rights for mining assets in three projects located in Pará, with significant potential for iron ore reserves, to be shipped in Maranhão.

With its launching scheduled for 2025, the first mineral project to be explored by JV Mineração is located near Parauapebas (Pará State), in the Carajás region, connected to the port by the Carajás railroad. “The exploration will follow the highest environmental and safety standards, in line with the strategy of sustainable capital allocation, supported by the Cosan Group’s EESG principles,” the notice of material fact says.

The new company’s CEO will be Juarez Saliba de Avelar, a seasoned executive from the mining segment who held leadership positions in companies such as Vale and CSN. Julio Fontana, former president of Rumo, with experience in rail and port logistics, will be an advisor and senior consultant at JV Mineração.

The purchase of the port of São Luís will be the first asset contribution made by Cosan in its new partnership. Rumo, the group’s logistics company, does not take part in this business.

Cosan intends to invest billions of reais to become a relevant player in mining.

One of the largest business groups in the country, Cosan has taken important steps in recent months to expand its business. Through Compass, it bought the largest gas distribution company in the country, Gaspetro, which belonged to Petrobras, for R$2 billion. Raízen, a joint venture between Cosan and Shell, raised R$6.7 billion in its IPO.

Raízen, the largest producer of sugar and ethanol in Brazil, had already announced the purchase of Biosev, which belonged to the Louis Dreyfus group — last week, the company also acquired 50% in Barcos y Rodados, the leader in fuel distribution in Paraguay.

Raízen lower sights for this year’s largest IPO

SPAC Falcon Capital Acquisition II pede um IPO de $ 400 milhões, liderado  por Alan Mnuchin de Ariliam |

Raízen – a joint venture between Cosan and Shell – defined Wednesday the offering price range in what can be the biggest IPO of the year. The operation can raise R$10.5 billion, considering all the lots and the top of the indicative range, which goes from R$7.40 to R$9.60.

Raízen was forced to lower ambitions to get the offering off the drawing board. The company had been sounding out the market on a R$90 billion market capitalization, which would allow it to raise up to R$13 billion considering the extra lots, including R$10 billion from the base offering. Now, the base offering will raise almost R$6.7 billion in the middle of the range – at the top of the range, the company could raise R$7.8 billion. At the floor of the price range, Raízen would raise R$6 billion.

The bank syndicate expects to set the price of the shares on August 3. BTG is the lead coordinator. Citi, Bank of America (BofA), Credit Suisse, Bradesco BBI, J.P. Morgan, Santander, XP Investimentos, HSBC, Safra, and Scotiabank are also coordinating the offering.

Since Raízen took the first prospectus to the CVM, Brazil’s securities market authority in June, listing in Level 2 of governance of B3, with two classes of shares – the common shares staying with Shell and Cosan – managers pointed out that the absence in the Novo Mercado, a section of the B3 exchange with stricter governance rules, could be a reason for discount requests, especially in an IPO more sensitive to the demand from foreign investors. “The controlling shareholder wants the money but doesn’t want the participation of minority shareholders. It’s a bad sign,” criticized a manager who is evaluating the offering.

The offering will include only preferred shares (810.8 million) and Raízen is listed at exchange B3’s Level 2. Cosan and Shell will hold the common shares, keeping control of the company. Liquidity is likely to be low after the offering as the free float will be limited to 10.7% if extra lots are sold. Raízen has asked B3 to allow the offering even as the free float will be lower than the required 25% – and is still waiting for an answer.

While Raízen moved ahead with the offer, the day was also marked by the cancellation of the IPO of InterCement, which would price the shares Wednesday. Amid pressure from investors to reduce the price range, especially after the competitor CBA topped the discount the day before, InterCement evaluated that it would not justify keeping the offer the way the market was willing to pay.

Sources say the discount request came mainly from local investors in the book, while foreigners kept their reserves within the range, but would not cover the operation alone.

On Tuesday, the Votorantim group accepted to reduce the price floor by 20% to list CBA raising R$1.6 billion. InterCement’s offer, in turn, would only be secondary and of a much larger volume, between R$2.7 billion and R$5.1 billion, according to the prices of the indicative range and the allocation of lots – which would take a significant portion of the controlling shareholder in case of discount.

The capital would be used to reduce the indebtedness of the holding company — the Mover Participações, formerly Camargo Corrêa – which may resort to other forms of capitalization or wait for another moment to come to market.

According to investors, the company waved its disagreement with a lower price considering that the cement market in Brazil is at a good moment, with growing demand, and that there are opportunities for consolidation and expansion in the short term.

Bradesco BBI, BofA, Itaú BBA, J.P. Morgan, and UBS-BB coordinated the IPO of InterCement. The indicative range was R$18.20 to R$25.50.

Source: Valor international

https://valorinternational.globo.com/

Cosan sees more demand for fuel

Energy holding Cosan saw its Ebitda increase 8.1% in the first quarter to R$2.6 billion, in comparison with the same period in 2020, while the adjusted net profit advanced 17.9%, to R$764.6 million. “Vaccination clearly works. The number [of cases] is dropping where there is mass vaccination, and we are seeing an increase in [fuel] demand. I think that all businesses will benefit from this,” says CEO Luis Henrique Guimarães. The convenience and proximity store business, the Nós group – a joint venture between subsidiary Raízen and Mexican Femsa – accelerated the opening of stores under the Oxxo and Shell Select brands, with a net addition of 65 points of sale in the quarter.

Source: Valor international

https://www.valor.com.br/international/briefs

Infrastructure is now the hot Story in Brazilian Commodities

The man in charge of Brazilian sugar giant Cosan Ltd. has little interest in talking about the sweetener. These days, he’s all about railways, writes Bloomberg in its latest report. Cosan is controlled by 69-year-old Rubens Ometto, one of the sixty most powerful men in Brazil.

The business that gave life to Cosan — the world’s biggest sugar-cane operation — has been stuck in the doldrums following years of depressed global prices and government policies that curbed the expansion of cane ethanol in Brazil. In stark contrast, the commodity powerhouse is ready to invest “tens of billions” in a plan that will reshape how the nation’s crops get transported, Chief Executive Officer Marcos Lutz said.

“Brazil infrastructure is now the hot story in commodities,” the 49-year-old executive said in an interview with Bloomberg at Cosan’s headquarters in São Paulo.

The South American nation — with its vast swaths of arable land along with abundant water resources and ample sunshine — is already the world’s biggest exporter of agricultural goods from beef to soybeans, and expansion is likely to continue, Lutz said.

That means even more pressure on infrastructure and logistics that have seen chronic problems under the weight of the farm boom. “We see a clear opportunity that derives from a long winter of under-investment,” he said.

Railroad that will Connect Port Terminals in the Northern and Southern Regions.

Cosan has been at the center of Brazil’s push for investments in train transportation. President Jair Bolsonaro’s government is seeking to double the country’s railway capacity through concessions that will demand about R$25 billion (US$6.3 billion) in capital expenditures over the next few years.

Last month, Cosan-owned Rumo SA won a first auction to complete and operate 955 miles (1,537 kilometers) of railroad that will connect port terminals in the northern and southern regions. The railway is planned to be the eventual spine in a network of lines sprawling across key crop-producing states.

Rumo is also in the final stages of a concession renewal process. The terms include more than doubling the annual capacity of the railway known as Malha Paulista, which connects Brazil’s largest port to the nation’s agricultural heartland. Rumo will spend as much as R$ 15 billion in CapEx through 2023, while “several” other investment opportunities are being considered, Lutz said.

“We’re talking about investments of a magnitude that have never been seen in Brazil’s railway sector,” he said.

The bet has won over investors. Rumo’s market value has jumped fourfold since April 2016 to about $7 billion, the most among global peers. The rail operator is now worth more than Cosan SA, the Sao Paulo-listed company that controls the group’s energy businesses, and its bonds trade above par. Both units are under Cosan Ltd., which is listed in New York.

 

Source: The Rio Times