RIO DE JANEIRO, Dec 15 (Reuters) - Junior miner MMX, owned by Brazilian magnate Eike Batista, will invest up to $1.2 billion to more than triple iron ore production capacity by 2015, the company’s president said on Tuesday.
MMX (MMXM3.SA) plans to reach a capacity of 33.7 million tonnes per year from the current 9 million tonnes per annum (MTPA), much of which will be dedicated to the growing Chinese market in need of raw materials for a surging steel industry.
“The total investment will be between $1 (billion) and $1.2 billion to take MMX to a production of 33.7 million tonnes,” MMX President Roger Downey told reporters following a presentation to investors. “We should reach that (target) around 2014, 2015.”
The investment is slated for the expansion of the Southeastern system, which includes the 7 MTPA Serra Azul mine and the Bom Sucesso project, which is still not operational.
The company also owns the smaller Corumba system, located in southwestern Brazil, which has a capacity of 2 MTPA.
MMX’s production dropped this year to as low as 50 percent of capacity as a result of the 2008 financial crisis, but Downey said it is now back near capacity.
Last month MMX announced a $400 million deal to sell a 22 percent equity stake in the company to China’s Wuhan Iron and Steel Co 600005.SS through a share offering expected to bring at least $200 million more from minority shareholders.
Downey said the Wuhan deal, together with additional capital from minority shareholders, would allow it to pay off its current $600 million of outstanding debt.
The accord includes a 20-year ore supply contract and an agreement to build a steel mill at Porto do Acu, a port terminal controlled by EBX logistics subsidiary LLX.
MMX is also evaluating greenfield projects in Chile after signing agreements in 2008 giving it the option to buy mineral production rights there.
Reporting by Brian Ellsworth; Editing by Walter Bagley