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Santos Brasil loses ESA cargo contract to rival Grupo Libra

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By Ana Mano and Flavia Bohone

SAO PAULO, March 9 (Reuters) - Logistics company Santos Brasil Participações SA has confirmed the termination of a contract to move containers for the ESA consortium of shipowners at the port of Santos effective May 1, according to a statement sent to Reuters on Thursday.

Santos Brasil, the largest cargo operator in the country, lost the ESA contract to Grupo Libra, the second largest, according to two sources briefed on the matter.

Grupo Libra declined to comment. Santos Brasil said the termination of the contract was "a normal market event."

Santos Brasil hares closed down 4.7 percent at 2.41 reais, the steepest daily decline in more than a month, after having fallen by more than 7 percent following the Reuters report.

With Thursday's drop, the stock reversed earlier year-to-date gains and is now down 0.8 percent since the start of the year.

The termination of the contract signals growing competition at Santos, Latin America's largest port, as logistics operators scramble in the face of a harsh economic downtown.

Libra's new ESA contract will entail the rehiring of personnel to handle the additional cargo, one of the sources said on condition of anonymity because the person is not authorized to speak in public.

Libra had laid off workers amid Brazil's harshest recession on record during the past two years.

Another source briefed on the matter said Libra's new contract involves 150,000 containers per year at Santos. This is equivalent to roughly 16 percent of Santos Brasil's entire container movement at the country's busiest port in 2016, according to public data.

Santos Brasil said shipowners in the ESA consortium include shipowners such as Cosco Shipping Holdings Co Ltd , Evergreen Marine Corp, Hapag-Lloyd AG and Hamburg Süd, among others.

(Reporting by Ana Mano and Flavia Bohone; editing by Jonathan Oatis)