September 10, 2019 / 9:59 PM / 7 days ago

Brazil Kazakh-backed mining startup in talks with joint venture partners

BELO HORIZONTE, Brazil, Sept 10 (Reuters) - A Brazilian iron ore startup backed by a Kazakh mining company is in talks with several potential joint venture partners who would help finance a $2.6 billion mine project, its chief executive said on Tuesday.

Bamin, backed by unlisted global mining and metals group Eurasian Resources Group, is talking to a consortium comprising three different Chinese companies, CEO Eduardo Ledsham told Reuters, confirming earlier media reports.

But he added that the company is also in “advanced negotiations” with three other potential investors drawn by surging iron ore prices, an increase partially fueled by the deadly Vale SA tailings dam disaster in January.

“We don’t have an exclusive arrangement with the Chinese,” Ledsham said. “We now have other options as a result of the changes in the iron ore market, which increased interest in the project.”

Ledsham, a former Vale executive, declined to identify the parties, citing confidentiality accords.

As part of the mining project in the northeastern state of Bahia, Bamin would partially finance a rail line to take ore to the coast and the company would pay the entire cost of building a $1 billion port to export it.

The mine project was first planned in 2005, during a commodities boom that lifted iron ore prices to more than $180 per tonne, compared with current levels of around $90.

Still, Bamin expects to have an internal cost of about $28 per tonne between mining the iron ore and shipping it to port, Ledsham said, giving the company an ample profit margin even if prices fall.

Ledsham said he is confident that a May 2020 scheduled auction for the concession rights for the planned freight train will proceed as planned despite past delays, especially given the pro-mining stance of far right President Jair Bolsonaro’s administration.

“We’re seeing a will to make things happen,” said Ledsham, who previously headed up Brazil’s mineral geological survey.

The project, which will start producing iron ore in the first half of 2025 if all goes well, will use a downstream tailings dam to process the metal, a decision that pre-dated a regulatory ban on the “upstream” variety involved in two lethal accidents at Vale mines in less than four years.

“We want to be the reference in terms of safety,” Ledsham said. (Reporting by Christian Plumb; Editing by Lisa Shumaker)

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