Credit rating agency Fitch said this week that Cosan’s investment in logistics to aid its new formed iron ore joint venture (JV) are positive for the company’s business model. Cosan is a sugar and ethanol producer that announced investments to explore the iron ore business in Brazil, as reported by SteelOrbis.
To aid its new iron ore business, Cosan’s subsidiary, Atlantico Participacoes, will acquire 100 percent of TUP Porto Sao Luis, known as Port of Sao Luis. It will pay BRL 720 million ($137.4 million) for the asset.
“The transaction will further increase Cosan’s business diversification, representing the entrance of the group in the iron ore business. Brazil is one of the world’s largest iron ore producers, representing a relevant share of the Brazilian exports basket,” the rating agency said.
Fitch Ratings said Cosan’s first iron ore project is expected to start up in 2025 near Paraupebas city in the state of Pará. It will also use the Carajás railway.
“The impact on Cosan’s credit metrics is limited and the deal will enhance its business diversification in the long term,” Fitch said.