China’s Wuhan Iron & Steel negotiate acquisition of stake in Brazilian company

9 June 2009

Sao Paulo, Brazil, 9 June – Chinese company Wuhan Iron & Steel may acquire stakes in MMX Mineração e Metálicos, a holding for the mining sector of Brazilian businessman Eike Baptista, or in one of its subsidiaries, MMX Sudeste, Brazilian financial newspaper Valor Económico reported.

The paper said that negotiations for the acquisition of the stake in MMX were underway and that teh deal, if it happened, would be carried out by a capital increase, which would provide the resources needed to develop MMX’s business plan.

“Negotiations continue and we are discussing relevant aspects of the deal related to Wuhan’s stake in MMX,” said Ricardo Antunes, chairman of LLX Logística.

LLX, a logistics company that is part of Eike Baptista’s group, along with MMX signed a memorandum of understanding with Wuhan that outlines a “potential” commercial and strategic partnership.

The agreement includes discussion on construction, by the Chinese company, in the super port of Açu, an LLX project in Rio de Janeiro, of a steel making plant with capacity to produce 5 million tonnes of steel per year, representing an investment of US$4 billion.

The memorandum signed wuth Wuhan outlines that the Chinese company can acuire a stake in MMX Mineração e Metálicos or in subsidiary MMX Sudeste and also includes establishing a long term contract via which Wuhan will by the entire production of MMX Sudeste.

Valor Económico said that the mining company planned to raise production of iron to from 8.7 million tonnes to 33.7 million tonnes by 2013.

MMX Sudeste’s production will be distributed via the Sudeste port, another of LLX’s port projects, in Itaguaí, in the Rio de Janeiro metropolitan region, with capacity to process up to 50 million tonnes per year, and is due to start operating at the end of 2011. (macauhub)