China Merchants bags first Brazilian port

China Merchants bags first Brazilian port

China Merchant Port Holdings (CMPH) has acquired a 90 percent stake in Terminal de Contêineres de Paranaguá (TCP), the second-largest box terminal in South America.

CMPH paid 2.9 billion Brazilian reals ($923 million) for TCP, buying the stakes of private equity firm Advantage International and APM Terminals, which acquired its 40 percent share in APMT via its purchase of Spain’s Grup Maritim. The deal took place as Brazilian President Michel Temer was in China for the Brazil, Russia, India, China, and South Africa (BRICS) economic summit, brightening the prospects for future Chinese investment in maritime, rail, road, and air infrastructure in Latin America’s largest economy.

“TCP is not only CM Port’s cornerstone to enter Brazil, but also the future hub of the rising commodity and goods trade flow between Brazil and China,” CMPH Managing Director Bai Jingtao said in a statement.

Paranagua is Brazil’s leading port for soy exports and Jingtao suggested CMPH might also invest in bulk and warehousing facilities in the port of Paranagua, located 151 nautical miles southwest of Santos, the biggest port in South America.

The three original founding partners of TCP — Pattac, Soifer Participações, and TUC Participações Portuárias — will keep control of the remaining 10 percent of the company.

Prospective buyers when TCP was first put on the market two years ago included DP World, PSA International, and Hutchison Port Holdings, according to sources at TCP.

CMPH is gaining a logistics company and a 325,000-square-meter container terminal with an annual capacity of 1.5 million TEU that has 3,300 plugs for refrigerated containers, which is the highest figure in Brazil. The terminal handled 725,000 TEU last year, a year-over-year decline to 7.3 percent, but in August set a monthly record of 74,898 TEU. TCP is in the middle of an expansion program that should wrap up in 2019 and will bring annual capacity to 2.4 million TEU annually.

Parangua is a key node in the supply chain of many major Brazilian poultry exporters, such as RF Group, JBS Group, Cotriguaçu Consortium, and Marfrig, and handled 120,000 TEU of poultry last year.

Robert Grantham, director of Iatjai-based Solve Shipping, said it is a sign of growing Chinese interest in infrastructure outside the country’s well-known Belt and Road project that seeks to link the Asian nation with the rest of the world via maritime, air, and overland infrastructure.

“Various Chinese companies are slowly but surely starting to buy up Brazilian infrastructure in a similar way to what they have done in Africa,” said Grantham, who worked as Brazil Country Manager for many years for China Cosco Shipping, the state-owned carrier of China. 

“They are especially investing in railroads and ports, and that is fine, but we need to bear in mind that they are not doing it because they are interested in helping Brazil and they are not doing it for the capitalistic reason of making a profit. The Chinese government will be involved, and they are doing it for geopolitical reasons and this must be considered.”

“Having worked with the Chinese for many years I have great respect for them, but we need to look into the implications of long-term investment for geopolitical reasons, which revolve around ensuring a continuing supply of food and minerals from Brazil,” he told JOC.com. “It could end up being a good thing for Brazil, but it must be monitored as the main aim is to guarantee the wellbeing of the Chinese people.”

TCP will remain under the leadership of Luiz Antonio Alves.

“Advent and our founding shareholders have been instrumental in supporting the transformation of TCP’s operations,” said the TCP executive. “Our annual capacity has expanded from 800,000 TEU in 2011 to 1.5 million TEU today, while our average productivity has increased from less than 30 moves per hour to 90 moves per hour.”

Contact Rob Ward at rcward788@btinternet.com.