Brazil Co GME4 Opens Way For Mining In Non-Traditional Areas
01 Juli 2009 - 10:20PM
Dow Jones News
A Brazilian company called Global Mining Exploration, or GME4
SA, is opening the way for mining development by non-traditional
players in non-traditional regions of Brazil.
Iron ore reserves owned by GME4 in the remote northeast state of
Piaui could be the third largest in the country, GME4 partner Joao
Carlos Cavalcanti, a geologist, told Dow Jones.
Almost all Brazil's current iron ore output of more than 300
million metric tons a year hails from deposits in Minas Gerais
State and the Carajas region of Para State in the eastern Amazon,
and is dominated by local mining giant Vale SA (VALE).
Cavalcanti is ambitious. GME4 plans to rival the world's big
three miners, Vale, BHP Billiton (BHP) and Rio Tinto (RTP), and
give global iron ore consumers an alternative source of supply, he
said.
GME4's current campaign to sell an 80% stake in its $2.4 billion
PI4 iron ore mine in Piaui has highlighted mining opportunities
outside the country's main ore mining areas.
"The PI4 mine will be the second largest in the world in terms
of material shifted," he said.
The 800-million-metric-ton PI4 mine is located amid a corridor
of iron ore deposits stretching 25 kilometers, Cavalcanti
explained.
According to Cavalcanti, factors attracting investors to PI4
include railroad links to two modern deepwater ports, cheap
hydroelectric power and firm state and federal government
support.
One of the local ports, Pecem, will soon host a steel mill built
by Vale and South Korea's Dongkuk (001230.SE). The other port, at
Suape, is also likely to have a steel mill built by Brazil's CSN SA
(SID), Cavalcanti said.
And foreign investors are aware of PI4's attractions.
A recent Credit-Suisse roadshow promoting the mining-stake sale
gathered expressions of interest from 10 major steel companies,
Cavalcanti revealed.
In some respects, Cavalcanti is an old-fashioned, maverick
prospector with an uncommon instinct for finds.
In 2007, he mapped iron ore deposits in his native state of
Bahia that had been ignored despite previous geological surveys
published in 1849 and 1937 indicating their existence.
Cavalcanti bought up the mineral rights and made more than $300
million from their sale to Indian mining company Zamin Ferrous. The
project is now being developed along with a railroad link and port
complex.
So when Cavalcanti announced the Piaui finds, other miners and
investors began to take notice.
Most major miners are reported to be stepping up their
exploration in Piaui.
According to Brazil's National Minerals Research Department, or
DNPM, there were 1,555 applications for exploration permits in
Piaui in 2008, triple the 2007 figure.
Cavalcanti's self belief and success in the Bahia asset sale
have attracted other investment partners for CME4 in mining
ventures.
GME4 is working on two nickel projects, one with Brazil's
Votorantim conglomerate and also a phosphate mine in Brazil.
-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086;
john.kolodziejski@dowjones.com