Indian state-owned miner, NMDC has signed a non-disclosure agreement with the Ferrous group, a multinational consolidator of iron ore, to buy a 50% stake in its Brazilian operations for $2.5 billion.
The Ferrous group will issue fresh shares worth $2.5 billion to NMDC over the next few years. The funds will be used for developing mines and building infrastructure.
The partners will divest a 20% stake in the joint venture to raise another $1 billion and there are plans to list the venture on the London Stock Exchange. This will have the effect of diluting NMDC’s down to 40%.
The Brazilian venture has around 3 billion tonne iron ores reserves with 35.6% grade Fe content, plus an estimated 1.6 billion tonnes in reserves of 30% Fe mines. Once operational, the mines could produce about 25 million tonne of iron ore initially that could be converted into 10 million tonne of high 67% Fe grade ore concentrate through beneficiation.
The group is developing a private sea port in Brazil to export its iron ore products. The mines are located 300 km from the sea, close to the nation’s capital, Brasilia.
A senior official with NMDC said the company is not looking at taking complete control of any foreign firm. “Joining hands with existing partners help in mitigating the risk,” he said. NMDC is also exploring joint mining opportunities with ArcelorMittal in Africa and is collaborating with Rio Tinto on exploration activities.
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