China Forestry Group Group Corporation studies acquisition of forest assets in Brazil

19 December 2017

The China Forestry Group Corporation has hired investment bank Modal as financial advisor to analyse the possible acquisition of forest assets put up for sale by French group Vallourec, one of the world’s largest producers of industrial tubular solutions, Brazilian financial daily newspaper O Estado de S. Paulo reported.

The assets of the French group are eucalyptus plantations in the state of Minas Gerais, which cover 230,000 hectares and have already been valued at between US$600 million and US$700 million.

The newspaper added that the Chinese group has not yet defined how it will structure this operation, since Brazil has been restricting the entry of foreign investors since 2010, following a decision by the Brazilian Federal Attorney General’s Office (AGU) that banned international groups from acquiring control of agricultural holdings.

One of the possibilities being considered will be setting up a partnership with a Brazilian group to allow for the purchase of the forest assets of the French group.

The Vallourec group uses eucalyptus wood to produce charcoal to burn at its steel units, but the steel production that started in 2015 led to an international restructuring of its business.

In 2016, the group shut down two of the three blast furnaces it had in Brazil and hired the BTG Pactual bank to sell a mine in Pau Branco, also in the state of Minas Gerais, worth an estimated US$500 million. (macauhub)