New Chinese-backed mine in Brazil requires damming of Vacaria River

Published by MAC on 2012-07-17
Source: Mining.com, Reuters

Plan is to slurry iron along a 420 km pipeline to the coast

Massive new Brazil mine will pipe iron-water slurry 420 kilometres to coast

Frik Els

Mining.com

7 July 2012

Reuters reports Hong Kong's Honbridge Holdings plans to build a 420 kilometre pipeline to move iron-ore from Brazil's Minas Gerais state to the coast instead of building a railway line.

The pipeline will carry a slurry of water and iron ore fines to the port of Ilheus on the Atlantic and will add $600 million to the project's cost estimated between $3.6 billion to $4.2 billion.

The Sul America de Metais (SAM) mine is designed to produce 25 million tonnes per year and the project backers say they have already obtained a water use licence:

The pipeline option was chosen over a rail-transport plan that required the construction of a spur line to the proposed mine and an upgrade to existing track, Estado de Minas reported.

To provide water for the pipeline, SAM plans to build an $80 million dam on the Vacaria River near Salinas, in the north of Minas Gerais, state officials told the paper.

The dam will also provide water to irrigate 500 small farms in the impoverished and drought-prone region.

The world's first iron ore slurry pipeline - 84 kilometres long - was built in Tasmania off the Australian south coast in 1967. The Savage River pipeline is still in operation.

China-backed SAM is one of a slew of planned new iron ore mines by Vale and companies controlled by billionaire Eike Batista in Brazil, the world's number two exporter of iron ore. The projects are estimated to increase domestic production of around 420 million tonnes at the moment by as much as 40%.

Top exporter Australia already ships 510 million tonnes of ore per year and Rio Tinto and BHP Billiton have plans to up capacity in the Pilbara region to some 750 million tonnes per annum.

China is the top consumer and producer of the steelmaking ingredient and the annual seaborne iron ore trade is roughly 1 billion tonnes, of which Vale, BHP and Rio control 60%.

This week India's mines minister announced the country was looking at scrapping a 30% iron ore export duty that could bring 100 million tonnes back onto market.

The spot price of 62% iron ore imported into the port city Tianjin in northern China on Friday was $135 a tonne. The price of the commodity has declined more than 8% over the last quarter as demand from top consumer China weakens. Benchmark Tianjin 62% ore averaged a record $168 during 2011.

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Honbridge picks pipeline for Brazil iron mine -paper

Reuters

7 July 2012

• Iron ore slurry line chosen over railway -government
  
• Honbridge mine, pipeline project cost $3.6 bln to $4.2 bln
• Mine to produce 25 mln tonnes/year; run by Votorantim
• Honbridge to build dam for pipeline water, irrigation

RIO DE JANEIRO - Hong Kong's Honbridge Holdings Ltd plans to build a 420-kilometre (260-mile) pipeline to ship iron-ore from a mine in Brazil's Minas Gerais state to a port on the country's Atlantic coast, the Estado de Minas newspaper reported on Saturday.

The pipeline will carry a slurry of water and fine, processed iron ore to the port of Ilheus in Brazil's Bahia state, as part of Honbridge $3.6 billion Sul America de Metais (SAM) project, the paper said, citing Minas Gerais officials.

Officials said the project could require an additional $600 million in investments, bringing total spending to $4.2 billion, Estado de Minas reported.

SAM plans to export 25 million tonnes a year of iron ore to Chinese and other steelmakers, the paper said, citing Minas Gerais officials. SAM is managed by Brazil's Votorantim Group, which sold the project to Honbridge for $390 million in April 2010. No date for start-up was given.

Honbridge's efforts are part of a flurry of new iron ore mining projects being developed in Brazil by local miners such as Vale SA, MMX Mineracao e Metais and Cia. Siderurgica Nacional and foreign-backed companies such as SAM and Ferrous do Brasil SA to meet the growing demand for steel in China and the rest of Asia.

These projects are expected to boost Brazilian iron-ore output by more than 40 percent to 450 million tonnes a year in 2015 from 420 million tonnes in 2011, according to Macquarie, an Australian-based banking group, and Ferrous do Brasil.

Honbridge submitted an environmental license petition for the pipeline with Brazilian environmental authorities on July 3 and has already received a water-use license, Honbridge said in a July 4 filing with Hong Kong securities regulators.

The application is for a preliminary environmental license that would allow the company to move ahead with planning and pre-construction activities. Getting final approval and starting output could take three to five years based on the progress of other Brazilian iron-ore mine projects in the region.

The pipeline option was chosen over a rail-transport plan that required the construction of a spur line to the proposed mine and an upgrade to existing track, Estado de Minas reported.

To provide water for the pipeline, SAM plans to build an $80 million dam on the Vacaria River near Salinas, in the north of Minas Gerais, state officials told the paper.

The dam will also provide water to irrigate 500 small farms in the impoverished and drought-prone region.

Honbridge in April 2011 signed an agreement with the Shougang Group, one of China's largest steelmakers, to provide it with 10 million tonnes of iron ore for 15 years. Chinese state-owned Shougang also agreed to a prepayment of $1.5 billion to help finance the new supply. (Reporting by Jeb Blount; Editing by Eric Beech)