Brazilian steel maker Usiminas signed an accord with the port operator LLX to ship iron ore through the Southeast Port in Sepetiba, Rio de Janeiro, the company.
The deal will secure logistics for Usiminas’ plan to expand the production chain into iron ore mining, which is expected to offer good margins in the future and give the steelmaker a natural hedge against rising ore prices.
Usiminas’ mining subsidiary Mineracao Usiminas has secured capacity to ship 3 million tons of iron ore starting in 2012, and up to 12 million tonnes in 2015 and 2016. The ore will come from the Pau de Vinho mine in Serra Azul, Minas Gerais state.
Usiminas also signed the accord with MMX , the mining company controlled buy billionaire Eike Batista’s conglomerate EBX. MMX announced in September that it would buy out LLX and it is also the majority stake holder with Usiminas in Pau de Vinho.
“With this contract, Mineracao Usiminas will secure the corridor for exporting its iron ore from 2012,” a market filing said.
Usiminas said in a filing that its board approved plans to invest 550 million reais in its mining division to expand iron ore production to 12 million tons a year from the current 7 million tons.
MMX will control 86.5 percent of Pau de Vinho’s iron ore output, while Mineracao Usiminas has a 13.5 percent stake. (Reuters)