Mubadala Capital Prepares Sale of Porto Sudeste Iron Ore Port and Mineracao Morro do Ipe Mining Project in Brazil

Mubadala Capital, the investment arm of the Abu Dhabi sovereign wealth fund, announced on November 12 that it is preparing for the sale of its Brazilian iron ore port, Porto Sudeste, and its joint mining project, Mineracao Morro do Ipe. Mubadala, which co-owns these assets with commodities trading giant Trafigura, has initiated an internal process to divest the port and mining project as part of its ongoing strategy to optimize its investment portfolio.

Leonardo Yamamoto, Executive Director of Mubadala Capital Brazil, confirmed the plans, stating that the firm is exploring the sale of Porto Sudeste along with the Mineracao Morro do Ipe mine in Minas Gerais. The two assets are integral to the production and transport of iron ore and could be sold together to create an integrated offering for potential buyers.

“We will offer the market the option of selling the mine as well because, for investors, it makes a lot of sense to have an integrated player,” Yamamoto said during an event in São Paulo. However, he did not provide a specific timeline for when the sale would take place, though he indicated that it would occur in the “near future.”

Porto Sudeste, located in the state of Rio de Janeiro, is a key asset for both Mubadala and Trafigura. The port has an impressive annual capacity to handle up to 50 million tonnes of iron ore. In 2023, it shipped 26.1 million tonnes of iron ore, marking a significant year-on-year increase from 17.4 million tonnes in 2022. Additionally, Porto Sudeste saw a rise in its oil transshipment operations, handling nine transshipment operations in 2023, up from five in 2022.

The port’s critical role in global iron ore supply chains has further enhanced its attractiveness to potential investors. Since its acquisition in early 2014, Porto Sudeste has become a “mature” asset, as noted by Yamamoto. “Our role in this specific asset, in this specific story, is no longer very relevant,” he remarked, signaling the company’s readiness to move on from the investment.

The Mineracao Morro do Ipe project, located in the iron-rich state of Minas Gerais, is a joint venture between Mubadala Capital and Trafigura, established in 2016. The project includes two mines: the Ipe mine, which currently produces around 3.5 million tonnes per annum (mtpa) of iron ore, and the Tico-Tico mine, which received its operating license less than a year ago. The combined production from both mines is expected to reach 9 million tonnes per annum as the owners invest BRL 1.3 billion ($230 million) to expand production capacity.

The ongoing investment aims to scale up production at both sites, bolstering the joint venture’s ability to supply iron ore to global markets. Yamamoto emphasized that offering the mining project alongside Porto Sudeste would be appealing to investors seeking a fully integrated solution, combining both production and transport capabilities.