China Merchants Port Holdings has made a significant move in the South American market by acquiring a 70% stake in Vast Infraestrutura, Brazil’s only privately operated Very Large Crude Carrier (VLCC) terminal. This strategic acquisition, valued at up to $714 million, is expected to enhance China Merchants’ presence in the region and solidify its global position in the shipping industry.
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China Merchants acquires 70% of Vast Infraestrutura for an initial payment of $448 million.
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The terminal, located in the Port of Açu, handles approximately 30% of Brazil’s crude oil exports.
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The deal includes potential milestone payments based on operational performance and licensing.
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This acquisition follows China Merchants’ previous investment in Brazil’s container terminal operator, TCP Participaçoes.
Strategic Importance of the Acquisition
The Port of Açu is strategically located within a 24-hour sailing distance from Brazil’s major offshore oil production fields. The terminal has a licensed capacity of 1.2 million barrels per day and currently handles around 560,000 barrels per day. This acquisition not only increases China Merchants’ operational capacity but also positions the company to better serve the growing demand for crude oil exports from Brazil.
Financial Details of the Deal
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Initial Payment: Approximately $448 million.
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Total Potential Value: Up to $714 million, depending on cash adjustments and other considerations.
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Milestone Payments: $56 million contingent on receiving operating licenses by the end of 2026 and 2027.
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Performance-Based Payments: Approximately $160 million based on the terminal’s performance over the next five years.
Background on Vast Infraestrutura
Vast Infraestrutura has been operational since 2015 and has established significant agreements with major energy companies, including Shell. The terminal’s strategic location and infrastructure allow for predictable operations with minimal downtime, supported by a dedicated fleet of tugs for tanker handling. In 2023, Vast reported a net profit before taxes of approximately $43 million, highlighting its financial viability and operational success.
Implications for China Merchants
This acquisition is part of China Merchants’ broader strategy to expand its influence in Latin America, a region that has seen increasing Chinese investment in recent years. The company aims to explore new growth drivers for its ports business, further consolidating its position in the global shipping market. The deal also reflects China’s ongoing efforts to reshape global trade routes and enhance its economic footprint in South America.
The acquisition of Brazil’s only private VLCC terminal marks a pivotal moment for China Merchants as it continues to expand its operations in Latin America. This strategic investment not only strengthens its position in the global shipping industry but also underscores the growing economic ties between China and South America. As the demand for crude oil exports continues to rise, this acquisition positions China Merchants to capitalize on future opportunities in the region.
Sources
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China Merchants buys major Brazilian VLCC terminal – Splash247, Splash247.
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China Grows in South America by Buying Brazil’s Only Private VLCC Terminal, The Maritime Executive.
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China Merchants acquires VLCC terminal in Brazil, Lloyd’s List.
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China Merchants splashes $448m to take over only private VLCC terminal in Brazil | TradeWinds, TradeWinds.
