BHP eyes Brazil project to expand output
Source: Agencies |
July 9, 2011, Saturday
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BHP Billiton Ltd, the world's largest mining company, is studying a 3.7 billion reais (US$2.4 billion) iron-ore project in Brazil as it seeks to expand output of the steelmaking material and gain from higher prices.
The project in the southeast of the country may start in 2017 and have initial annual production capacity of 20 million metric tons of iron ore concentrate, the government of Minas Gerais state said on its website, citing a letter of intent signed by the Melbourne-based BHP. Spokesman Ruban Yogarajah confirmed the letter's contents.
BHP, the world's fifth-biggest company by market value, got more than a quarter of last year's US$24.5 billion earnings before interest, taxes, depreciation and amortization from its iron ore operations, the majority of which are in Western Australia.
Chief Executive Officer Marius Kloppers in February committed US$80 billion in spending on BHP's mines and oil fields by 2015.
Global demand for iron ore exports rose 12 percent last year to exceed 1 billion tons for the first time, according to a report from analysts at MF Global this week. Prices should remain at "elevated levels" of near US$160 to US$170 a ton for the next three to five years, they said.
The letter is "a non-binding document providing a preliminary idea of the potential project," BHP's Yogarajah said from London. The proposed operation is separate to the company's Samarco iron ore venture with Vale SA, the world's biggest exporter of the raw material.
The new project includes mining sites in the municipalities of Ouro Preto and Itabirito, in Minas Gerais state, and an ore-processing plant in a location the company hasn't chosen yet, according to the government statement. It would employ about 1,100 people and create a further 1,100 indirect jobs. The unit would export 80 percent to 90 percent of its output.
BHP and Vale agreed in April to spend as much as US$3.5 billion expanding the Samarco plant to capacity of 30.5 million tons of iron ore pellets.
The project in the southeast of the country may start in 2017 and have initial annual production capacity of 20 million metric tons of iron ore concentrate, the government of Minas Gerais state said on its website, citing a letter of intent signed by the Melbourne-based BHP. Spokesman Ruban Yogarajah confirmed the letter's contents.
BHP, the world's fifth-biggest company by market value, got more than a quarter of last year's US$24.5 billion earnings before interest, taxes, depreciation and amortization from its iron ore operations, the majority of which are in Western Australia.
Chief Executive Officer Marius Kloppers in February committed US$80 billion in spending on BHP's mines and oil fields by 2015.
Global demand for iron ore exports rose 12 percent last year to exceed 1 billion tons for the first time, according to a report from analysts at MF Global this week. Prices should remain at "elevated levels" of near US$160 to US$170 a ton for the next three to five years, they said.
The letter is "a non-binding document providing a preliminary idea of the potential project," BHP's Yogarajah said from London. The proposed operation is separate to the company's Samarco iron ore venture with Vale SA, the world's biggest exporter of the raw material.
The new project includes mining sites in the municipalities of Ouro Preto and Itabirito, in Minas Gerais state, and an ore-processing plant in a location the company hasn't chosen yet, according to the government statement. It would employ about 1,100 people and create a further 1,100 indirect jobs. The unit would export 80 percent to 90 percent of its output.
BHP and Vale agreed in April to spend as much as US$3.5 billion expanding the Samarco plant to capacity of 30.5 million tons of iron ore pellets.
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