Emerging Markets: LLX Logística/Brazil Brazilian Port Attracts Chinese Auto And Steel Firms

Investor: Company to watch

By Gordon Platt

LLX Logística was created in 2007 by Eike Batista-controlled EBX Group to build three large private ports serving southeastern Brazil, a region that accounts for more than 75% of the country’s exports. Batista, founder and president of EBX, is integrating the new port operations with the conglomerate’s energy, metals and mining companies. He also has attracted Chinese partners to build steel and automotive plants, as well as two local firms to erect cement plants on the adjacent industrial areas of the first port, Açu Super Port. The port will begin operating in 2012 and will also serve Brazil’s offshore oil industry.

In December 2009, MMX, the iron-ore mining subsidiary of EBX, signed a 20-year supply contract with China-based Wuhan Iron and Steel. The Chinese firm purchased a 21.5% stake in MMX for $400 million, enabling MMX to expand its mining operations to meet the needs of its Chinese partner.

Wuhan also agreed to build a steel mill at Açu, in a venture with EBX. The steel mill, China’s biggest investment in Brazil to date, was instrumental in convincing JAC Motors, a China-based automaker, to build a plant at the Açu port to produce trucks and low-cost cars. MPX Energia, another EBX company, is building a coal-fired power plant at Açu to ensure an uninterrupted supply of electricity.

In January 2010, LLX Logística received a $234 million loan from Brazilian development bank BNDES to purchase equipment for construction of Sudeste Port. LLX is seeking a partner for the project.