RIO DE JANEIRO -(Dow Jones)- Brazilian iron ore miner MMX Mineracao e Metalicos SA (MMXM3.BR), or MMX, said it plans to tap iron ore assets "stranded" without transport facilities that could produce as much as 200 million metric tons a year.
MMX, controlled by Brazilian billionaire Eike Batista, will be able to offer shipping for the assets--owned by various companies in the so-called Iron Ore Quadrilateral of Brazil's Minas Gerais state--via its Sudeste port in Rio de Janeiro state, MMX Chief Executive Roger Downey told analysts and investors on a conference call.
Sudeste, currently being built by MMX's PortX unit, is due to start operations in the third quarter of 2012, with shipping capacity of 50 million tons a year of iron ore. In addition, work has already begun on the second phase expansion of the port, which will eventually double its export capacity to 100 million tons a year, PortX officials said on the call.
The first phase of the port will handle shipments of ore produced by MMX and by a new MMX partnership recently struck with steelmaker Usinas Siderurgicas de Minas Gerais SA (USIM5.BR), or Usiminas, which also produces iron ore in the region. New partners are now sought to use the shipping capacity from Sudeste's second phase, according to Downey.
The port expansion will allow MMX to consolidate "stranded assets that haven't been able to export," he said. "There are 200 million tons of stranded resources within reach. It's perfectly achievable to tap this."
Transport of the region's iron ore to the sea will also depend on rail availability offered by the MRS Logistica SA railroad, which connects the region to Sudeste port.
MRS, in which steelmaker Cia Siderurgica Nacional SA (CSNA3.BR, SID) is a shareholder, recently announced new investments of about 1.5 billion reais ($903 million) to boost its capacity.
Downey said that the enlarged transport facilities will allow MMX to buy iron ore on domestic markets from landlocked miners to sell on seaborne markets.
"This gives us tremendous arbitrage," he said.
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