MSG to become a joint venture between CVRD & JFE Steel

MSG to become a joint venture between CVRD & JFE Steel

An agreement has been signed at the end of last week between Companhia Vale do Rio Doce SA (CVRD) and JFE Steel Corp., formerly known as Kawasaki Steel, for the restructuring of shareholding of Minas da Serra Geral SA (MSG) as operation will be stopped by the end of 2003 due to deplation of iron ore reserves in Capanema. This agreement required JFE Steel to take over 1% stake of CVRD and 24.5% stake of a Japanese company and upon the completion of the agreement, both CVRD and JFE Steel will own 50% of MSG. According to market reports, JFE Steel will annually purchase 2 million tonnes of iron ore from CVRD due to the twelve year contract whereas MSG will lease heavy equipments as well as new equipments to CVRD to be used in Fabrica Nova iron ore mine, located at the east of Capanema. CVRD's plans is to develop this iron ore mine and launch production by 2005 first with an annual capacity of 10 million tonnes. The annual iron ore capacity is planned to increase to 15 million tonnes by 2009.