China's Wuhan Iron & Steel Group (WISCO) on Monday agreed to two major investment deals involving Brazil's iron and steel sector, namely, with Brazilian miner MMX and its parent company, EBX.
It was announced by the related parties on Monday that WISCO has agreed to purchase a 21.52 percent stake in Brazil's MMX Mineracao e Metalicos SA for US$400 million. The deal includes a 20-year iron ore purchase and sales agreement and will place WISCO as the second-largest shareholder in MMX. Under the agreement, WISCO will purchase at least 50 percent of the iron ore from MMX's Serra Azul mines, part of the miner's Sudeste system. The pact could be expanded to at least 50 percent of the iron ore from the Bom Successo mine, MMX said. MMX is controlled by Brazilian billionaire investor Eike Batista.
Additionally, WISCO and EBX, MMX'S holding company, signed an accord on Monday to build an integrated steel mill in Brazil's Rio de Janeiro state, though the plan is pending various approvals. WISCO would own a 70 percent stake in the five million ton per annum venture, whose products may include heavy plates for steel building. The project may also have significant room for expansion, with total investments potentially reaching up to $5 billion. EBX said the two firms expect to gain licenses by May 2010 to start building the plant, which may be financed by China Development Bank and Brazil's development bank BNDES.