The advance of mining companies BHP Billiton and Brazil’s Vale in the fertilizer sector in the past few years kept U. S. agribusiness group Bunge on tenterhooks.
The world’s largest oilseed processor realized it was time for change in its operations. The result was the recent announcement that the firm would sell its upstream fertilizer assets in Brazil to Vale, the world’s No. 1 iron ore producer.
“Of course, we always liked our mining activities. We’ve been doing this for 70 years, but over the last two years mining companies made a lot of money with iron and expanded into the sector,” Bunge chief executive Alberto Weisser said in an interview.
“We started to worry. The game was changing and it is going to be totally global, (involving) cash flows different from ours,” he told Reuters.
So, when Vale made a “very attractive” offer, the decision was not that difficult, Weisser said, adding that the proceeds would be used in the company’s core activities: agribusiness, food and ingredients and, more recently, sugar and ethanol.
Brazil is still the most important country for the group, mainly due to its agricultural potential.
Bunge is the country’s No. 1 player in oilseeds, with large soy-processing operations, and now it intends to use its Brazilian operations as a platform to become a leading global player in the sugar market, Weisser said.
But the appreciation of the local currency against the dollar, which approached 34 per cent in 2009, has made Brazil a less competitive country in which to operate.