As MMX’s bankruptcy protection plan was approved last week by the company’s creditors, trading firm Trafigura is expected to buy the company’s iron ore assets, according to a media report.
As previously reported by SteelOrbis, struggling Brazilian iron ore producer MMX had presented a recovery plan in July this year, in which Trafigura could pay up to BRL 174.3 million to acquire MMX’s mining operations.
Under the terms of the proposal, Trafigura would have a 51 percent stake at MMX’s mining assets, while MMX’s creditors would own the remaining 49 percent stake.
MMX’s mining assets include two iron ore plants, which have a combined capacity to produce 6 million mt of the product per year.
According to a media report, the purchase is subject to “certain conditions,” as the final financial terms of the deal weren’t announced.
“Trafigura and its subsidiaries operate in the ferrous mining sector and these assets represent an opportunity to expand its businesses, as well as complement the joint investment with Mubadala at the Sudeste port,” the company said in a statement on Saturday.
Trafigura’s deal comes a few months after local media reported that the company was interested in acquiring iron ore assets in Brazil. At the time, reports said Trafigura was interested in acquiring assets in the Brazilian iron ore supply chain, as it wanted to have a stronger presence in the Brazilian iron ore market, which meant it could look at mines, warehouses, transportation and trade of the product.
Trafigura, which is also the owner of the Sudeste port, along with Mubadala, is said to start exporting iron ore this week from the terminal. Brazil steelmaker Usiminas was one of the companies interested in using the port to export iron ore, but due to a breach of contract, Usiminas suspended a contract it had with the Sudeste port.
According to Usiminas, the port should be completed by April 2012. Usiminas also said the ending of the contract was motivated by the Sudeste's port "obligation to pay the contractual penalties in connection with such a breach." Last year, Usiminas said it expected to expand its iron ore shipments through the Sudeste port, whose operations were planned to begin in January 2015. At that time, Usiminas said it planned to expand its iron ore capacity from 8 to 12 million mt. However, to reach that capacity, the company would need to load at the Sudeste port the exceeding volumes of the product.