Ferrous invests in railroad terminal and branch line

Ferrous Resources do Brasil, mining company headquartered in Belo Horizonte (MG), will invest US$ 30 million in the construction of a shipping terminal and railroad modal for its own initial loading, and for third-party loading, totaling 8 million tons of iron ore on cars of the MRS railroad in order to carry the product by the ports of Sepetiba and Itaguaí, in the seacoast of Rio de Janeiro. Yesterday, the company received the enterprise installation license (LI) and the operation license for Santanense mine, one of the five mining facilities owned by the company.

According to Mozart Litwinski, CEO at Ferrous, the terminal works must be completed until November.

The yard with silos will be installed close to the Viga mine, owned by Ferrous, in Congonhas, beside the Casa de Pedra mine of CSN and MRS railroad. The work will require the construction of a short railroad branch line with just more than two kilometers in order to connect the terminal to MRS cars. This will enable the company to carry the sinter-feed iron – a type of concentrated ore, which cannot be carried by ore pipeline – to the Vale’s Port of Sepetiba.

This year, Ferrous should trade 2.5 million tons of ore, including 1 million tons to be traded in the domestic market, while the remaining 1.5 million tons of sinter-feed will be exported to China. Ferrous won in 2011 a bid to ship 750,000 tons of sinter-feed per semester through Vale’s port, paying US$ 28 per shipped ton.

Exportation of ore assures income of at least US$ 250 million to the company, reports Litwinski. According to him, the ore sale in the domestic market is always a good business to Ferrous.

The ore price at the mine exit is being sold from US$ 75 to US$ 100 per ton, compared to US$ 50 – US$ 60 / ton one and half year ago. He attributed the price increase to the strong demand for the product.

In the domestic market, the ore is consumed by who is buying for exportation, he informed. Ferrous customers’ portfolio includes Namisa, a mining company where CNS has 60% shareholding of a group of Japanese and Korean companies.

Litwinski commented that Ferrous will close the year with installed capacity of 4 million tons per year. The expectation for 2012 is selling 6 million tons of ore and reach installed capacity of 8 million tons / year. Ferrous’ goal is producing 25 million tons by the end of 2014.

This year, the company already achieved the installation license for the Viga mine, the most important one among the five mines it owns in the “iron quadrangle”, and yesterday it received the operation license for Santanense mine, in the city of Itatiaiuçu, in Serra Azul, “iron quadrangle” area of Minas Gerais. The mine has total capacity of 105 million tons (gross mining production).

The production at Santanense mine complements that of Esperança and Viga mines.

The mining company CEO anticipated that the name of the strategic partner of Ferrous should be announced until September. This process, started this year, is under responsibility of Deustche Bank.

Litwinski informed that the company has US$ 300 million in cash. “We are spending only with essential investments, such as the terminal and environmental licenses. We also have billed with the ore sales. Our strategy is aimed at not accelerating the investments while the new partner is not with us,” he stated. The total investment plan of Ferrous amounts to US$ 3.7 billion.