OREANDA-NEWS. December 7, 2011. Usiminas takes a major step to consolidate its mining strategy, as its affiliated company Mineracao Usiminas has just entered into two new partnerships in the region of Serra Azul (MG).

The goal is to provide long-term sustainability to Mineracao Usiminas’ iron ore production capacity of 29 million tonnes/year, planned to be reached by 2015. The company’s present production capacity is around 8 million tonnes/year. “We are already investing BRL  4 billion in our own mines in the Serra Azul region. Now, with these partnerships, we plan to make feasible a sustainable yearly output at the level of 29 million tonnes”, Mineracao Usiminas executive director Wilfred Bruijn explains.

The new partnerships are part of the Usiminas group’s value chain integration process, whose focus includes iron ore self-sufficiency by 2015. In this sense, Mineracao Usiminas has leased the mining rights from MBL Materiais Basicos in July this year. In 2010, an agreement with MMX provided for the joint exploitation of Pau de Vinho Mine in Serra Azul (MG) and the use of Southeast Port in Itaguai (RJ) for five years, with an option for five more years.

Partnerships

Mineracao Usiminas acquired Mineracao Ouro Negro S.A., whose assets include real estates and mining estates in the region of Serra Azul, state of Minas Gerais. The mining estates comprise estimated 200 million tonnes of iron ore reserves at the border with the estates currently owned by Mineracao Usiminas, which enhances the company access to its reserves by enlarging the mine pit. Approximately 350 million tonnes of ore reserves are estimated to be released, totaling around 550 million tonnes of iron ore when considering the recently acquired mining estates. The transaction amounted to USD 367 million.

In addition, Mineracao Usiminas entered into an agreement with Ferrous Resources do Brasil with an aim to optimize the exploitation of the ore reserves located in the boundary area between the two miners in Serra Azul (MG). This 10-year agreement enables to expand the pit area of both mining estates, which further improves the mining potential, with immediate benefits to both parties. The agreement sets forth mechanisms for cooperation between the two companies in order to release existing mineral reserves that could not be mined individually due to land boundary issues.

J.Mendes

Moreover, Mineracao Usiminas finalized the acquisition of all the shares from the miners J.Mendes, Somisa and Global Mineracao for USD  100 million, which brings the total transaction value to USD  1.025 billion. This is in addition to the down payment in the amount of USD  925 million made in 2008 and it is based on qualitative and quantitative surveys of the iron ore reserves.

Mineracao Usiminas

As an affiliated company of Usiminas, Mineracao Usiminas was set up in 2010 as a partnership with Japan’s Sumitomo. The company’s mines are located in the region of Serra Azul, in the so-called Iron Square of Minas Gerais. The extracted iron ore is processed into pellet feed, sinter feed and lump ore that are either delivered to Usiminas steelworks or sold in the marketplace.

Mineracao Usiminas is implementing an investment program involving approximately BRL  4 billion expenditures in industrial facilities, equipment, dams and loading terminals, among other things, up to 2015.