LONDON Feb 27 Commodities trader Glencore
has bought an unspecified stake in unlisted Brazilian
iron ore exporter Ferrous - its first equity stake in a producer
of the steelmaking commodity.
The Swiss-based trader and miner has also agreed to buy 20
million tonnes of iron ore from Ferrous over four years, in a
deal that feeds Glencore's ambitions in a sector that has long
remained the preserve of major mining groups Vale,
Rio Tinto and BHP Billiton.
Ferrous, which has twice failed to raise capital through
share offerings, has long been seeking a partner to bankroll its
ambitious expansion plans, and the miner said on Wednesday the
Glencore agreement strengthened its financial position.
"The agreement guarantees a substantial part of the
company's production until 2016," chief executive Jayme Nicolato
Ferrous, which produced 3.2 million tonnes of iron ore in
2012, is targeting 5 million tonnes this year and wants to raise
output to 17 million tonnes from 2016.
Glencore, like rival trader Vitol, has big ambitions for
iron ore, which it hived into a separate business arm last year.
It has since struck deals to buy output from emerging producers
such as African Minerals and Bellzone.
Glencore and Vitol are competing for space in an iron ore
market dominated by BHP, Rio and Vale with a combined share of
around 60 percent, leaving even the world's largest commodity
traders to battle over production in emerging iron ore basins
such as west Africa.
Glencore has also been circling smaller Brazilian producers.
Sources with knowledge of the matter said last year it was
one of the suitors for Anglo American's Amapa iron ore mine,
eventually sold to Zamin in January.