Brazil: Brazilian group partners China’s Wuhan & Steel for business in Brazil

20 May 2009

São Paulo, Brazil, 20 May – Brazilian companies LLX Mineração e Metálicos and MMX Mineração e Metálicos said Tuesday in São Paulo they had signed a memorandum fo understanding with China’s Wuhan Iron and Steel (Wisco) for a potential commercial and strategic partnership.

According to the statement, this partnership could include construction of an integrated steel making unit with capacity of 5 million tonnes per year in the port of Açu in Rio de Janeiro.

The memorandum includes the acquisition by the Chinese company of a stake in MMX, supply of iron ore by MMX to Wisco at benchmark prices and port and steel making services by the Brazilian companies for ship building.

The chairman of LLX and MMX, Eike Batista, said in a statement that “this combination of businesses, once completed, will probably represent the most significant Chinese investment in Brazil and one of the most relevant commercial association between a Brazilian group and a Chinese company.”

Construction, control and operation of the steel plant will be in the hands of Wisco and EBX, the holding for Batista’s companies, may have a significant minority stake.

As well as this, the long term contract with benchmark prices for ore involves “practically all” the export capacity of MMX Sudeste Mineração, a subsidiary of MMX.

EBX’s negotiations with Wisco are taking place at a time when MMX is re-launching operation at its iron mine in Corumbá, in the Brazilian state of Mato Grosso do Sul, which had been halted since December due to a drop in demand as a result of the international financial crisis. (macauhub)

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