Brazil’s Cosan announces expansion into mining, joint venture with Aura Minerals

RIO DE JANEIRO, BRAZIL – Cosan (CSAN3) on Monday, August 23, advised the market that it is entering the mining sector. The move includes the presentation of a binding proposal for the acquisition of 100% of TUP São Luís, a port terminal for private use in the capital city of Maranhão for R$720 (US$134) million, in addition to the formation of a joint venture with Aura Minerals (AURA33) in iron ore.

It will be Cosan’s fifth vertical business expansion: it currently operates Raízen (RAIZ4, a joint venture with Shell in the sugar and ethanol, energy and fuel distribution sectors), Compass (gas and energy), Moove (lubricants) and Rumo (RAIL3, a rail-based logistics operator).

It is yet another bold move by entrepreneur Rubens Ometto, founder, controlling shareholder and chairman of the board of Cosan, one of Brazil’s largest industrial groups, with about R$100 billion in yearly revenues.

The announcement disclosed a new investment strategy through a fund structure, through which it will make investments with its own resources and eventually with third parties in new businesses, according to a notice published after the market close.

The offer for the port was sent by Atlântico – a Cosan subsidiary – to the São Luís Port Company, owned by China’s CCCC, and to minority shareholders that hold a 49% stake in the terminal, the company said.

The closing of the deal is subject to precedent conditions, such as regulatory and competition agency approvals, as well as corporate approvals from CCCC.

In addition, the initiative also involves the signing of a memorandum of understanding, also through Atlântico, to enter the mining area through a joint venture with the Paulo Brito Group, controller of Aura Minerals (AURA33), which will explore iron ore to be shipped through the port in São Luis.

The memorandum provides that Atlântico will hold 37% of the total capital and share control of the new company – i. e., 50% of the company’s common shares – after the port and cash contribution, Cosan said.

“The joint venture will be an integrated mining and logistics company that will hold, in addition to the port, exploration rights for mining assets in three mineral projects located in the state of Pará, with important potential iron ore reserves to be transported through the port,” the company said.

The first mineral project to be explored by the joint venture is located near Parauapebas (PA), in the Carajás region, connected to the port by the Carajás railroad, and is expected to begin exploration in 2025.

The new company will have Juarez Saliba de Avelar as CEO – ex-Vale (VALE3) and CSN (CSNA3) – while Julio Fontana will be a board member and senior consultant.

“Cosan enters with a strategic partner in a new line of business, contributing with its port logistics and management expertise,” the company said.