MMX expects higher sales volumes in H2

Thursday, 19 Aug 2010
BNamericas cited Mr Roger Downey president of Brazil as saying that Brazilian miner MMX expects sales volumes to continue growing in H2 after the company saw its Q2 iron ore sales increase 190% YoY to 1.83 million tonne. Sales in Q2 were focused on the domestic market, which absorbed 84% of volume.

Mr Downey said that in April to June, MMX shipped 162,000 tonnes of iron ore to China's Wuhan Iron & Steel as part of the agreement signed with the Chinese firm which holds 21.5% stake in MMX.

Under the terms of the agreement, MMX will ship at least 50% of the iron ore to be produced at Serra Azul part of the Sudeste system to Wisco. The contract also allows for the extension of this off take to at least 50% of the iron ore to be produced at the Bom Sucesso project, which could result in combined exports of at least 16Mt/y once the system is fully ramped up. Bom Sucesso is part of Sudeste.

MMX's Sudeste system sold 1.41 million tonne in Q2, a 209% increase YoY. The Corumba system's sales amounted to 423,383t, 142% more than in 2Q09.

Mr Downey said that the company has implemented the quarterly pricing mechanism, using the price reference of Brazilian mining major Vale sometimes and Australian prices at other times. Prices tend to be lower on the domestic market, as logistics and freight costs are not included. However, MMX's margins are favorable both for local sales and exports.

He said that MMX recently concluded the acquisition of 60% stake in GVA Mineracao in which the Brazilian miner already held 40%. The acquisition amount of USD 50.8 million will be paid in 78 installments beginning in September. The installments will be adjusted from April 2012, based on iron ore price fluctuations. If iron ore prices are higher then, the acquisition price will consequently be higher.

(Sourced from Business News Americas)