Brazilian Steelmaker USIMINAS Advances Iron Ore Mining Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Steelmaker Usinas Siderurgicas de Minas Gerais S.A. (PINKSHEETS:USNZY) (USIMINAS) (Belo Horizonte, Brazil) is advancing plans to reach an annual production of 29 million tons of iron ore by 2014. In 2008, the Brazilian company entered into the mining sector by acquiring an iron ore mine complex with four mines--J. Mendes, Global, Somisa and Pau de Vinho--and three processing plants in the city of Itatiaiucu, Minas Gerais, in southern Brazil. Currently, the Itatiaiucu mine complex produces 6 million tons per year of iron ore, which represents approximately one-half of the raw material required for the two steel mills operated by Usiminas in Ipatinga and Cubatao, both in Brazil.

After the acquisition of this iron ore mine complex, USIMINAS has been working on an expansion project, estimated to worth about $1 billion. The project is being developed in two stages. For the first phase, capacity production will be increased from 6 million to 12.5 million tons per year by the end of 2011, requiring an investment of $450 million. The existing facilities at the complex will be upgraded, aiming to reach a production of 8 million tons. Furthermore, a new 4.5 million ton-per-year processing plant will be constructed, achieving an annual production of 12.5 million tons of iron ore. Detailed engineering studies are currently being performed by engineering company ECM SA (Belo Horizonte, Brazil). Earthmoving for the new facility is expected to start in May.

For the second phase, the company plans to reach an annual capacity of 29 million tons by 2014, with an investment of $600 million. USIMINAS is considering constructing a 24 million-ton-per-year processing plant or three facilities with an annual capacity of 8 million tons per year each. The new facilities will replace the three 8 million-ton-per-year plants acquired in 2008, which will be dismantled once the expansion is complete. The company is currently conducting conceptual studies for this second stage and expects to start basic engineering in the second half of 2010.

The company is also conducting feasibility studies for a pelletizing plant that will be designed to produce 7.5 million tons per year of iron pellets. This project will require another $500 million and is expected to start operations by the end of 2014.

USIMINAS is performing conceptual studies to construct a new iron ore port to export the remaining iron ore that will not be used at its mills. With a 25 million ton transshipment capacity, the port will be located in the Sepetiba bay, in the city of Itaguai, Rio de Janeiro. Hatch Engenharia e Consultoria Limitada (Sao Paulo, Brazil), a subsidiary of Hatch Limited (Mississauga, Ontario), is in charge of the conceptual study and basic engineering for the project, which has an estimated total investment value of $500 million.

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