Representatives of Indian companies will visit iron-ore reserves owned by Brazil’s GME4 with a view to buying mining rights, Global Mining Exploration, or GME4, said Thursday.

“Talks are at an advanced stage and the visit will take place on September 8 and 9,” the company said.

The deposits in question, called PI4, are located in Piaui State in north east Brazil.

The PI4 mine will be able to produce 20 million metric tons a year of ore pellet feed worth $1.4 billion.

GME4 said the Indian group couldn’t be named for confidentiality reasons.

Joao Carlos Cavalcanti, partner in GME4, said in June that some Indians were interested in buying mining concessions at PI4.

The Indians represented six iron-ore mining companies with China supply contracts, he said.

GME4 aims to sell an 80% stake in its $2.4-billion-valued, 800-million-metric-ton mine.

GME4 also received a delegation in late June representing a pool of six
small Chinese steel mills who were also interested in PI4, Cavalcanti
said.

According to Cavalcanti, a worldwide roadshow in May and June,
organized by Credit Suisse to promote the PI4 project, garnered
protocols of intent with 10 of the world’s major steelmakers.

The Piaui deposits have around 32% iron content and are 16 kilometers
from the route of the Transnordestina Railroad, which is expected to be
operational in 2011.

The railroad will connect two relatively new deepwater ports: Suape near Recife, and Pecem, near Fortaleza.

According to Cavalcanti, the ore will arrive at port for a total cost
of between $21 and $22 per ton, including mining, pellet-processing and
transportation.

Cavalcanti said he has signed an advantageous energy supply contract
for the mine from the Sobradinha dam, the largest in northeast Brazil.

He said he would pay between $4 and $7 per ton for the electricity used in processing the iron ore.

Source: Dow Jones

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