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WISCO talks to build Brazil steel mill dormant - LLX
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Saturday, 10 Nov 2012

Reuters reported that talks between China's Wuhan Iron & Steel Co Ltd and Brazil's LLX Logistica SA on the construction of a 5 million tonnes a year steel mill at the Brazilian port of Açu are dormant.

Mr Filipe Mello investor relations director at LLX said that WISCO, as China's No 4 steelmaker is known and Brazilian port operator LLX have not met in months. WISCO's name has also been removed from plans for the port included in LLX presentations to investors.

Mr Mello said that "WISCO has never told us they have canceled plans to build the mill and have denied rumors of pulling out before. We haven't talked recently, though, and at one time we were meeting on a daily basis to plan."

Mr Mello said that LLX removed WISCO's name from its presentations because they now have a policy of only including the names of companies that have signed contracts to build at the port site. He added that LLX and WISCO's agreement was merely a memorandum of understanding.

Mr Mello said that WISCO did have some concerns about the suitability of building at the Açu site. While Anglo American Plc will ship iron ore from its Minas Gerais mining project through Açu, WISCO wanted to get its ore from Batista's MMX Mineração e Metalicos SA. WISCO owns 16% of MMX.

Mr Mello said that the line, which is expected to be put out to tender next year by Brazil's federal government, is not expected to be ready until at least 2015.

LLX had hoped the mill would be one of two steelmaking plants at Açu. LLX is holding final talks with Ternium SA (TX.N), part of the Italo Argentine Techint steelmaking group, to build another mill at Açu. Ternium will get its iron ore from Anglo American Plc, which is building an iron ore slurry pipeline from its mine in Minas Gerais to Açu.

Doubts about the future of WISCO's Brazilian mill come after a series of high profile Brazilian steel projects have been abandoned, delayed or put up for sale.

The USD 5 billion WISCO mill, originally planned to open in 2012, was to have been the largest ever Chinese investment in Brazil. It was to be a key part of an industrial development plan at the Port of Açu, about 320 kilometers (200 miles) north of Rio de Janeiro, that includes an iron ore export terminal, a shipyard, power generation plants and railway access.

LLX, controlled by Brazilian billionaire Mr Eike Batista, is part of Batista's Rio de Janeiro based EBX mining, oil, electrical power, shipbuilding, port and ship leasing group.

Source - Reuters


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