* Chinese steelmaker concerned about rail link, ore
* LLX says steelmaker has not said it wants to cancel
* Wuhan has no firm contract for mill site, LLX says
By Jeb Blount
RIO DE JANEIRO, Nov 8 Talks between China's
Wuhan Iron & Steel Co Ltd and Brazil's LLX Logistica
SA on the construction of a 5-million-tonne-a-year
steel mill at the Brazilian port of Açu are "dormant," the
port's owner told Reuters on Thursday.
Wisco, as China's No. 4 steelmaker is known, and Brazilian
port operator LLX have not met in months, said Filipe Mello,
LLX's investor relations director. Wisco's name has also been
removed from plans for the port included in LLX presentations to
LLX, controlled by Brazilian billionaire Eike Batista, is
part of Batista's Rio de Janeiro-based EBX mining, oil,
electrical power, shipbuilding, port, and ship-leasing group.
The $5 billion Wisco mill, originally planned to open in
2012, was to have been the largest-ever Chinese investment in
Brazil. It was to be a key part of an industrial development
plan at the Port of Açu, about 320 kilometers (200 miles) north
of Rio de Janeiro, that includes an iron ore export terminal, a
shipyard, power generation plants and railway access.
"Wisco has never told us they have canceled plans to build
the mill and have denied rumors of pulling out before," Mello
said. "We haven't talked recently, though, and at one time we
were meeting on a daily basis to plan."
LLX removed Wisco's name from its presentations because they
now have a policy of only including the names of companies that
have signed contracts to build at the port site, Mello said.
LLX and Wisco's agreement was merely a memorandum of
understanding, he added.
Wisco officials in China could not be reached outside of
normal business hours.
Wisco did have some concerns about the suitability of
building at the Açu site, Mello said. While Anglo American Plc
will ship iron ore from its Minas Gerais mining project
through Açu, Wisco wanted to get its ore from Batista's MMX
Mineração e Metalicos SA. Wisco owns 16 percent of MMX.
Getting ore from MMX mines requires the rebuilding of a
300-kilometer (186-mile) rail line liking Açu with MMX's iron
ore terminal southeast of Rio de Janeiro.
The line, which is expected to be put out to tender next
year by Brazil's federal government, is not expected to be ready
until at least 2015, Mello said.
LLX had hoped the mill would be one of two steelmaking
plants at Açu.
LLX is holding final talks with Ternium SA, part of
the Italo-Argentine Techint steelmaking group, to build another
mill at Açu. Ternium will get its iron ore from Anglo American
Plc, which is building an iron ore slurry pipeline from its mine
in Minas Gerais to Açu.
Doubts about the future of Wisco's Brazilian mill come after
a series of high-profile Brazilian steel projects have been
abandoned, delayed or put up for sale.
ThyssenKrupp AG put its 73 percent stake in the
5.3 billion euro ($6.73 billion) Companhia Siderurgica do
Atlantico (CSA) mill in Rio de Janeiro up for sale earlier this
Vale SA, ThyssenKrupp's partner at CSA, has
stopped preparations to build a mill in Marabá, Brazil, after
the government backed out of plans to upgrade river transport
needed to supply the mill and get its products to market.
In 2003, one of China's largest steelmakers, Baosteel Group,
began talks with Vale to jointly build a steel plant. Although
they reached an agreement in 2007 to build the plant in Brazil's
Espirito Santo state, the deal was later canceled due to the
global financial crisis.
In July, the 21st Century Business Herald, a Chinese
newspaper, reported Wuhan had pulled out of building the Açu
mill because of problems with rail and other transport systems
for coking coal and other raw materials.
The paper did not name its sources. Wuhan and LLX officials
at the time denied the report.
LLX rose 2.5 percent to 2.44 reais in Sao Paulo trading on