Essar Group; Essar Steel Mining in Brazil

Essar Steel Seeks Strategic Partner for Brazilian Mines

Essar Steel has begun informal discussions to bring in a strategic partner for its Brazilian iron ore mines, according to people familiar with the development.

The Essar group was granted mining concessions by the Brazilian government, valued at over $50 million, as part of the Ruias-controlled group’s plans to set up a steel plant in Trinidad and Tobago.

With plans for the steel plant abandoned due to strident opposition from the local people and the group planning another multi-billion dollar iron ore investment in Mwanesi in Zimbabwe, Essar is now seeking strategic partners to take out the mining concessions, said the people cited earlier.

An Essar spokesperson said the Amapa iron ore mines in Brazil were meant to feed the proposed 2.5-million-tonne steel plant in Trinidad and Tobago which was subsequently abandoned. However, it could still look at exploration activity for these assets.

Sources familiar with the group said if a potential buyer shows interest in these mines, Essar would entertain an offer though it has not been officially put on the block.

They added that the group has not yet done any official reserve evaluation studies on actual iron reserves in Amapa even as the agreement and the concessions give Essar the right to conduct exploratory mining for iron ore, manganese ore, chrome ore or any other available mineral.

The area, Essar has earmarked for exploration, measures 7,852 hectares and is one of the larger deposits in Brazil. Last week, Essar said it would spend $100 million for iron ore exploration and other related activities in Zimbabwe. Iron ore extracted from Ripple Creek mines will feed Zisco Steel’s requirements in the short term, a company statement said.

It concluded the Zisco Steel buyout on Wednesday for $750 million, taking over all the liabilities of the company and the Zimbabwe government.

Source: ET 09082011