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DJ Brazil Miner CVRD Targets Coal For International Growth
(Comtex Business Via Thomson Dialog NewsEdge)SAO PAULO, Mar 15, 2006 (Dow Jones Commodities News via Comtex) --While Brazilian mining giant Companhia Vale do Rio Doce (RIO), or CVRD, will continue to develop its rich mineral portfolio at home, the company is focused on metallurgical coal deposits, which Brazil lacks, for its overseas growth efforts, a company executive said Wednesday.
"Our vision is that we have to search for organic growth," said Fabio Barbosa, the company's chief financial officer. Barbosa made the comments at a seminar hosted by Sao Paulo's Association for Analysts and Capital Markets Investment Professionals.
However, Barbosa said the company has ramped up exploration and research outside Brazil. Of the $491 million that CVRD has budgeted for research and development in 2006, 43% will be directed at projects outside Brazil. That compares with four years ago, when CVRD's research and exploration budget outside its home turf was next to nothing, he said.
Chief among these projects are efforts to develop metallurgical and thermal coal deposits in Angola, Australia, China and Mozambique.
"The coal segment could define CVRD's future international projects," said Fabio Barbosa, the company's chief financial officer. "We want to be a player in the global coal market."
According to Barbosa, the company's first big step could come from its Moatize coal project in Mozambique. CVRD is currently conducting feasibility studies on the deposit, which holds 2.4 billion metric tons of metallurgical and thermal coal. The feasibility study is expected to be completed in the second half of 2006.
Current projections put mine life at 70 years. It's expected to enter production in 2009.
"It's our first big international project," Barbosa said.
While working in some regions of Africa presents some measure of danger because of conflicts and political instability, Barbosa said the company is comfortable with its efforts in Mozambique, a former Portuguese colony that shares languages with Brazil.
"There is great potential for growth in Africa, as long as risk is controlled in the best way possible," Barbosa said.
In January, CVRD received its first shipment of coal from a joint-venture operation in China. A shipment of 40,000 metric tons of anthracite coal arrived at the Praia Mole port in Brazil's Espirito Santo state from China's Henan Longyu Energy Resources Co. Ltd.
CVRD acquired a 25% stake in the company in June for $86.4 million.
Henan Longyu is a joint venture between CVRD and Chinese companies Yongcheng Coal & Energy and steel giant Baosteel International. The company operates two mines in China's Henan province, with annual output of 4.5 million metric tons of anthracite coal.
CVRD also is involved in a coke joint venture operation in China called Shandong Yankuang International Coking. The company is a joint venture between CVRD and China's Yankuang Group and Itochu Corporation. The coke plant, to be completed in July, will produce 2 million tons of coke and 200,000 metric tons of methanol per year.
CVRD is also doing a pre-feasibility study on the Belvedere deposit in Queensland, Australia.
-By Jeff Fick, Dow Jones Newswires; (55 11) 3145-1481; jeff.fick@dowjones.com
(END) Dow Jones Newswires
03-15-06 1423ET
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