China miner to buy Brazil's Itaminas iron ore mine

[March 25, 2010]  SHANGHAI (AP) -- A state-run Chinese mining company said Thursday it has agreed to buy the Itaminas iron ore mine in Brazil from its owner, Bernardo de Mello.

The East China Mineral Exploration and Development Bureau, based in Nanjing, said it had bargained the asking price for the mine, which produces 3 million tons of high-grade iron ore a year, down to $1.22 billion from the original asking price of 2 billion.

"This is indeed an astronomical figure, but it's precisely because of the mine's advantages," the Chinese company said in a statement.

China views access to iron ore supplies as a strategic priority, given the reliance of its steel industry on imports. The country imported 630 million tons of iron ore in 2009, up nearly 42 percent from the year before, and the government has been complaining that soaring costs are harming steel mills.

Chinese mining and energy companies have been hunting for overseas assets to expand their resource base. Last week, mining giant Rio Tinto Ltd. and China's Chinalco signed a deal to develop an iron ore reserve in the West African country of Guinea.

The East China Mineral Exploration and Development Bureau is owned by Jiangsu province, one of China's wealthiest regions, near Shanghai. Last year, its Jiangsu East China Non-Ferrous Metals Investment Holding Co. agreed to invest at least $8 million in Perth-based Arafura Resources, though the deal lapsed earlier this year without being completed.

"China has the will, and more acquisitions are waiting in the wings," East China Minerals said in the statement.

The Itaminas mine is reported to have reserves of 1.3 billion tons.

"Conditions for development are good, raid and road logistics are smooth," it said.

The mine's owner, entrepreneur Bernardo Paz de Mello, was to formalize the sale with the Chinese company in a signing ceremony on Thursday.

The company says it had support from major government agencies such as the National Development and Reform Commission, the chief planning agency, in seeking the acquisition.

[Associated Press; By ELAINE KURTENBACH]

Associated Press researcher Ji Chen contributed to this report.

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