The decree will allow the Group to move to acquire the title to the required land along its planned pipeline route within the state of Minas Gerais. The Group intends to acquire land along the pipeline route and/or to negotiate rights of way through negotiation with individual landowners. However, the decree provides for expropriation, administrative easement and temporary occupancy, if necessary for the construction of the pipeline. The Group must still negotiate with individual land owners but only about the compensation to be paid for access and use of their land, which is subject to judicial consideration based on the fair value of the property.
Commenting on the announcement, Ferrous CEO, Mr Mozart Litwinski said, "I am very gratified by the support Ferrous is receiving from state government authorities in Brazil as we work to build our mines and transportation infrastructure to supply iron ore to the export market.
"The award of this environmental license is another significant step for Ferrous and speaks to our strong relationship with local communities and with the State regulatory authorities. The Company is making excellent progress on its planned development of the Viga mine, pipeline infrastructure and port as it moves towards becoming a major iron ore producer."
Ferrous is a privately registered company which was incorporated in February 2007 to acquire iron ore mineral resources primarily in Brazil and develop mining operations and related infrastructure to produce and sell iron ore products to the global steel industry. The Group has since acquired significant iron ore assets in Minas Gerais, Brazil, which it plans to develop in two stages. The first stage targets a production rate of 25 Mtpy of pipeline concentrate by the end of 2013 and the development and construction of a purpose-built Group-owned port at President Kennedy in southern Espƒrito Santo state and of an iron ore slurry pipeline infrastructure system to transport pipeline concentrate from Ferrous' Viga property to the planned port, with first exports expected in late 2013. The second stage targets expansion of production to achieve production at a rate of 50 Mtpy (including 5 Mtpy of pipeline concentrates purchased from third parties) by early 2016 and the expansion of the design capacity of the pipeline system and port to 50 Mtpy to accommodate this increased production.
In addition, the Group has acquired certain mineral rights near Jacuƒpe in Bahia state, Brazil. Exploration and appraisal work has begun at Jacuƒpe but is at an early stage. If the appraisal work is successful, the Group intends that development of this project will take place concurrently with the development of the properties in Minas Gerais. The Group's conceptual plan contemplates a production rate of 15 Mtpy of pipeline concentrate from early 2016 and the development and construction of a Group-owned port on the shore of Baia de Todos os Santos in Bahia state and an iron ore slurry pipeline infrastructure system to transport pipeline concentrate from the Jacuƒpe property to that port.