ICBC pledges loan to CCCC for Private Use Terminal Construction Project at Porto São Luís (Linked to Record ID#62080)

Project narrative

On September 1, 2016, China Communications Construction Company (CCCC) signed an investment agreement and financing framework agreement with the Industrial and Commercial Bank of China (ICBC) and Thorell, a Brazilian firm, for the Private Use Terminal Construction Project at Porto São Luís in Brazil. In July 2017, CCCC signed an investment agreement with WPR Participações (a Brazilian firm and subsidiary of WTorre Group) for building the terminal. Then, on March 16, 2018, ICBC, represented by ICBC Brazil, signed a financing mandate letter committing to provide a loan for this project. The loan's face value and borrowing terms are unknown. However, it is known that the purpose of this loan was to cover the 70% of the over $700 million total project cost. The remaining 30% was expected to come in the form of an equity investment from CCCC (captured via Record ID#62080). The Private Use Terminal Construction Project at Porto São Luís is intended to improve supply chain operations in the agricultural industries from mid-West Brazil (States of Mato Grosso, Goiás, Tocantins, Pará, Maranhão, and Piauí). Works involve construction of a water port with four berths and supporting storage facilities. This is a greenfield private port terminal located in the Organized Port Complex of Itaqui, in the municipality of São Luís, State of Maranhão. The port would be strategically located to facilitate the export of grains coming from the mid-West and the imports of fertilizers, grain, oil, pulp, and other liquid bulks to the North region. Port San Luis was supposed to be jointly constructed by CCCC South America Regional Company, Concremat (subsidiary of CCCC), Second Harbor Engineering (SHEC, also a subsidiary of CCCC), Thorell, Lyon Capital, and WPR Participações. According to the Executive President of Concremat, "most of the supply chain will be Brazilian, with specific equipment coming from China." On March 16, 2018, CCCC signed the EPC agreement and the groundbreaking ceremony took place. Construction was scheduled to last three years. According to an August 2018 article from Concremat (a subsidiary of CCCC), workers had began earthworks and drilling onshore and offshore. The peak of work was expected to occur between June 2019 and April 2021. As of November 2021, Porto São Luís is scheduled to start operations in 2025. This project was constructed on a BOO+EPC basis meaning CCCC would build, own, and operate the port. In December 2017, CCCC officially completed the investment transaction and officially took a 51% controlling stake in the project. Lyon Capital owns 20% of stakes, WPR owns 24%, and the rest is held by unspecified shareholders. According to a document from April 2020, this project was stalled due to environmental issues and public backlash. The Port of San Luis is located in a vast mangrove area where local and migratory birds and various marine species breed. CCCC did not fulfill official requests to establish a conservation unit in the project area. There are also archaeological and a sacred historical sites that the CCCC has also failed to protect. The environmental licenses for this project have been obtained without consultation with affected human communities, especially the Cajueiro people. There have been reports that project developers have threatened local leaders, pressured communities to sell their land, unlawfully demolished houses, and destroyed forests. Brazilians are calling for the project to be canceled due to its negative environmental and social impacts. In 2019, local military forces have clashed with protestors attempting to protect their homes from demolition. In November 2021, Cosan Group (a Brazilian company controlled by Atlântico Participações) signed an agreement with CCCC to acquire 100% of shares for the Private Use Terminal Construction Project at Porto São Luís. They immediately acquired the minority stake equal to 49% and will proceed with negotiations with CCCC for their 51% stake. A Cosan representative said that a “memorandum of understanding for the construction of the Port, aimed at the outflow of ore, was signed with Concremat and companies of the CCCC group. The definitive contracts for the construction of the port are conditioned to the closing of the acquisition of 100% of the shares of the port project.” The Government of Maranhao was involved in coordinating this change in ownership. In June 2021, it was also revealed that the ICBC loan was never finalized.