HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

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Vale, China's Baosteel Weigh Steelworks Project

posted on Jun 07, 2011 08:44AM

Vale, China's Baosteel Weigh Steelworks Project

RIO DE JANEIRO—Brazilian mining giant Vale SA has informally resumed talks with Baosteel Group Corp., China's biggest steelmaker, on a possible partnership to develop a $6 billion steelworks project in Espirito Santo state, in southeast Brazil, two officials at Vale said late last week.

"They are just corridor-level talks at the moment, not formal negotiations," one of the people said, asking not to be identified. "But Baosteel's still in the running."

U.S. steelmaker Nucor Corp. may also be interested in talking to Vale about joint projects, according to Nucor officials attending the Brazilian Steel Institute IABr annual congress in Sao Paulo last week.

"We have a certain level of focus on Brazil," said Chris Goebel, Nucor's business-development director. "We could consider a partnership with Vale," he said, without specifying any particular product area.

According to Nucor Chairman Daniel DiMicco, the U.S. company is seeking to expand its steelmaking activities world-wide.

In early 2009, Vale and Baosteel canceled a steel mill they had planned to build in Espirito Santo state after failing to secure approval from Brazil's environmental authorities. Espirito Santo authorities said that the project would create a drain on local water resources and create too much air pollution.

Vale has since redesigned the project on a smaller scale, cutting capacity in half to five million tons a year of steel slabs. The project will be located at Anchieta on the Espirito Santo coast.

Last week, Vale's marketing, sales and strategy director, Jose Carlos Martins, said Vale will proceed alone with the project until it gains all the licences it needs and will then bring in partners for the project, called Companhia Siderurgica Ubu. The search for the partner is now starting, Mr. Martins said.

Vale gained a preliminary license for the Ubu mill in March and hopes to gain a construction license in the third quarter of 2012, Martins said.

Last week, Benjamin Baptista Filho, chief executive of ArcelorMittal Brasil, said ArcelorMittal is no longer interested in participating in Ubu, after finishing a round of talks with Vale.

ArcelorMittal prefers to expand by producing more advanced steel products, rather than through increasing capacity for slabs, which aren't considered a viable bet given world overcapacity and market volatility, an ArcelorMittal executive said.

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