August 30, 2018 / 11:42 AM / 3 months ago

Sumitomo in advanced talks for stake in Rumo's rail unit -report

BRASILIA, Aug 30 (Reuters) - Japan’s Sumitomo Corp is in advanced talks with Brazil’s Rumo SA for a minority stake in a 7,200-km railroad system in the south of the country, newspaper Estado de S.Paulo reported on Thursday.

Sumitomo wants to acquire up to 30 percent of the so-called Malha Sul rail system, the report said, citing two unnamed people with knowledge of the matter.

Representatives for Rumo and Sumitomo did not immediately respond to requests for comment.

Rumo, owned by energy and logistics group Cosan SA , is looking for partners to boost investments in the aging railway, which has transported smaller cargo volumes over the years.

Reuters reported in November that Sumitomo was among the interested parties, competing with China Communications Construction Co Ltd and Japan’s Mitsubishi Group.

The purchase hinges on the government agreeing to renew Rumo’s license to operate the so-called Malha Paulista, a separate stretch in the state of São Paulo, expiring in 2028, Estado said.

That is likely to happen in coming months, according to the report, which investors would take as a sign that the Malha Sul concession is likely to also be renewed before it expires in 2027. (Reporting by Bruno Federowski Editing by Jeffrey Benkoe)

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