Gerdau goes it alone with new iron ore investment plan

Gerdau has decided to go ahead with its iron ore plan without establishing partnerships, according to ceo André Gerdau Johannpeter.

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“Proposals made by interested companies did not fulfil our expectations,” he said in a conference call on Thursday November 1.

These firms were from the USA, Europe and Asia, cfo Osvaldo Schirmer said.

Johannpeter also noted that Gerdau does not plan to proceed with a previously reported initial public offering for its iron ore division.

Mining strategy
Gerdau has set up a new iron ore strategy on a 117% increase in its captive mineral resources in Brazil’s south-eastern Minas Gerais state.

Measured, indicated and inferred mineral resources are now estimated at 6.3 billion tonnes, with an average Fe content of 40%, against a previous forecast of 2.9 billion tonnes.

The company now intends to increase its iron ore capacity from 11.5 million tpy in 2013 to 18 million tpy in 2016, after a 500 million Reais ($246 million) investment.

It also plans to reach an annual iron ore output capacity of 24 million tonnes in 2020 through the addition of new processing plant. “This aim, however, is still being studied,” Johannpeter said.

Product range
Gerdau will be able to produce concentrates, pellet feed, sinter feed and lump ore, but no longer plans to build a pelletizing plant.

The company announced an additional 500 million Reais investment in the construction of a railway terminal in Miguel Burnier, Minas Gerais, to transport iron ore output.

This terminal will be able to meet future additional iron ore capacities, Johannpeter said.

Gerdau is continuing to analyse the construction of a private port terminal in Itaguaí, Rio de Janeiro state, to export its iron ore surplus, taking into account sustainability and profitability issues.

First shipment
Gerdau will ship its first iron ore cargo in November, Johannpeter said.

The destination of the 160,000 tonnes sinter feed cargo, however, was not disclosed by the company.

“We are already negotiating new export deals, but I can’t be precise about how much will be shipped in the short term,” he added.

Gerdau’s Açominas steelworks will consume 7-7.5 million tpy of the iron ore produced in Minas Gerais, while the surplus will be sold on both the Brazilian and international markets.