COFCO to invest more in Brazil, but will be selective, says exec

SAO PAULO (Reuters) - Chinese state-owned commodities trader COFCO INTL [CNCOF.UL] plans to continue to invest in Brazil in the near future after having quickly achieved a significant position in the local commodities market, but will be very selective in choosing next targets.

COFCO sources and trades grains, oilseeds, sugar, coffee and cotton in Brazil, where it hosts most of its 36 Latin American warehouses, eight food processing plants and 10 port terminals.

“It is a company with financial muscle, it has the capacity to invest. And it will invest to consolidate the expansion it has projected for Brazil,” Valmor Schaffer, COFCO’s top executive for grains and oilseeds in the country, told Reuters in an interview late on Monday.

“But we will make those investments in a responsible manner, looking at the return on investment, not simply going out to buy anything indiscriminately,” Schaffer said. He declined to say how much the trader planned to invest.

In just a few years COFCO has grown to a position in Brazil that more traditional rivals like Cargill Inc [CARG.UL], Bunge Ltd and Archer Daniels Midland Co took decades to build. The Chinese company is already one of the top grain exporters in Brazil and also holds significant positions in sugar, ethanol, cotton, biodiesel and coffee.

The largest chunk came with the acquisitions of Noble and Nidera, part of a $4 billion buying spree used by COFCO in recent years to expand beyond China and secure global reach, following a new strategy designed by China’s command.

The company has used plenty of Brazilian expertise on that drive. Three out of the five people in COFCO INTL’s executive committee are Brazilians.

Schaffer says company’s fast growth in Brazil has attracted attention, particularly considering the difficult financial situation of many companies in the country following a deep recession.

“We receive an enormous amount of leads for deals and offers to buy assets” he said. “But again, we are very cautious on investments. The company evaluates all possibilities before moving the next piece.”

The trader has been taking part in discussions regarding a possible project, the so-called Ferrograo, a rail line from Mato Grosso to northern Brazilian ports, but it said there is no conclusion on that yet.

Schaffer said Brazil still has a lot of room for agricultural expansion and it is the place where things will continue to happen considering future food production.

Reporting by Marcelo Teixeira in Sao Paulo; Editing by Matthew Lewis