CVRD buys MBR iron ore unit from Japanese partners

CVRD buys MBR iron ore unit from Japanese partners

Brazil’s CVRD, the world’s biggest iron ore miner, said on Wednesday it will acquire full control of its iron ore subsidiary, Mineracoes Brasileiras Reunidas (MBR), from Japanese partners.

Companhia Vale do Rio Doce previously held an 89.8 percent stake in MBR, the world’s fourth-largest iron ore producer, with output of 64.6 million tonnes in 2006. MBR has proven and probable iron ore reserves of 1.13 billion tonnes.

“The transactions announced will transfer to CVRD the effective control of 100 percent of MBR’s capital for the next 30 years, allowing us to maximize our exposure to one of the best iron ore assets in the world and exploit synergies from the operation of mines, plant and maritime terminals,” CVRD said in a statement.

CVRD said it agreed to pay $230.8 million for the stakes of Mitsui , Sumitomo Metal Industries Ltd. and Sumitomo Corporation in Empreendimentos Brasileiros de Mineracao S.A. (EBM), a holding company that controls MBR.

Mitsui said in a statement in Tokyo earlier on Wednesday that it would sell its 3.1 percent stake in MBR as part of CVRD’s effort to simplify its complicated shareholder structure. Mitsui still has a 5 percent stake in CVRD.

CVRD said it had entered into a usufruct agreement on the EBM shares owned by Nippon Steel Corporation , JFE Steel Corporation, Itochu Corporation , Marubeni Corporation , Mitsubishi Corporation , Kobe Steel Limited and Nisshin Steel Co. Ltd. , representing 13.753 percent of EBM’s capital.

“This agreement will transfer to CVRD during the next 30 years, all rights and obligations entitled to the EBM shares, including the right to dividends,” CVRD said. In exchange CVRD will pay to the seven partners $60.5 million and an annual fee of $48.1 million.

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