Cosan acquires 4.9% of Vale, plans to buy more

Gongo Soco mine in Minas Gerais. (Image: Agência Vale.)

Brazilian conglomerate Cosan SA said on Friday it had acquired a 4.9% stake in Vale SA and intends to increase its bet in the mining company.

The deal marks a major breakthrough in Cosan’s push into the iron ore industry, bolstered by one of the world’s largest miners.

Cosan said its stake in Vale could reach 6.5%, pending approval from Brazil’s antitrust watchdog.

Cosan, which is controlled by Brazilian billionaire Rubens Ometto and operates in segments ranging from sugarcane to logistics, will pay around 21 billion reais ($4.04 billion) for the deal, funded by long-term credit lines.

In a securities filing, Cosan said it made the purchase “through a subsidiary and a combination of direct investments, equity and derivative operations.”

Cosan made its debut in the mining sector last year, when it formed a joint venture with Aura Minerals’ controlling shareholder, obtaining exploration rights for mining assets in three mineral projects in Brazil’s northern state of Para, near Parauapebas, where Vale also operates.

At the time, Cosan also acquired the Sao Luis port company in northern Brazil for 720 million reais from China Communications Construction Company, with aims to use it to transport iron ore.

Shares in Cosan ended down 8.7% on Friday, while Vale’s shares fell 0.05%, after having risen more than 5% earlier.

($1 = 5.1996 reais)

(By Peter Frontini and Roberto Samora; Editing by Jonathan Oatis, Richard Chang, Aurora Ellis and Leslie Adler)


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