Brazil iron ore producer MMX saw the stake it had at the Sudeste port, in the city of Itaguai, in the state of Rio de Janeiro, decline to 5 percent from 31 percent as a result of a company’s decision to not purchase back more stakes at the JV project.
In a filing at the nation’s securities exchange commission, CVM, MMX said its current challenging financial situation didn’t allow the company to acquire the stakes again.
“The company wasn’t able to use that right [of purchasing back stakes at the port] due to the lack of sufficient financial resources and to the impossibility of contracting new loans,” it explained in the document.
“As a result, the company’s indirect stake at the Sudeste port was reduced from 31 percent to 5 percent … resulting in the loss of the company’s rights [which were] attributed in the agreement with the shareholders of the Sudeste port.”
After facing delays to start transporting iron ore, and after having one of its clients, Usiminas, end a contract with the port due to a breach of contract, the Sudeste port sent an 80,000 mt vessel loaded with the commodity to China in September this year.
Local steel producer Usiminas saw the port as an opportunity to expand its iron ore shipments. However, delays in the project and a “breach of contract” forced Usiminas to end a contract it had with the Sudeste port.
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.