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Glengarry outlines Brazil iron-ore growth ambitions

Issued at 2010-02-27



PERTH (miningweekly.com) – With Brazil expected to show an economic growth of about 4,7% in 2010, and 3,7% in 2011, Australia-based minerals explorer Glengarry has put in place a dual-development strategy to build a new international iron-ore company.

In a statement on Tuesday, the explorer said that with the recent completion of its merger with Brazilian iron-ore company Centaurus Resources, it would be one of the few ASX-listed companies offering direct exposure to the rapid development and growth of Brazil.

“We have a clear strategy to build a quality international mining company over the next three years, and this will take shape in the coming months with an aggressive work programme under our domestic iron and steel strategy,” said MD Darren Gordon.

Glengarry aims to sell at least three-million tons of iron-ore, grading 63% iron, by the end of 2013, into the domestic steel industry in Brazil.

“The Iron Quadrangle’s proximity to the domestic steel industry in Brazil is analogous to having a Pilbara on the Korean Peninsula or in the Japanese archipelago.”

Being located in midst of a growing 40-million tons a year Brazilian steel customer base allows Glengarry to differentiate itself from many other Australian listed iron-ore companies, which face the significant barriers to market entry of extensive and costly infrastructure.

The exploration company noted that some of the biggest global steel producers, and potential customers, were located within 100 km of its Brazilian projects and extensive tenement portfolio. 

Under the domestic strategy, Glengarry anticipated moving quickly towards production to generate strong cash flows, which would underpin its growth in the short-to-medium term.

EXPORT MARKET STRATEGY

Glengarry said that another factor differentiating Brazil was the high quality of iron-ore products produced in the country, which supported its medium-term intention to implement an export market strategy.

Rapidly declining availability and quality of high-grade direct shipping ore lump worldwide had driven steel producers to far greater dependence on prepared feeds, especially sinter. This, along with the worldwide push to reduce carbon footprints, was driving steel producers to demand higher-quality raw materials. The highest grade, lowest silica sinter feed would come out of Brazil, which hosted what were probably the largest known resources in the world.

Under Glengarry’s export market strategy, which would leverage off the cash flow to be generated by the company’s domestic strategy, it would aim to acquire or develop from its existing asset base a project capable of producing between 12-million tons and 15-million tons a year of between 64% and 69% iron product for a minimum project life of ten years.

The company reported that it would start activities on several of its existing projects in the near future and adding that it was reviewing a number of other project opportunities, which could enable it to realise the export market component of its overall business plan.

“Our focus will remain within Brazil, which is well endowed from an iron-ore perspective, has a large and well-established steel industry and will continue to allow us to meet our key objectives of achieving domestic supply, as well entering the export market as the second prong of our strategy,” said Gordon.

Glengarry’s existing tenement portfolio comprises 55 granted exploration licences and 30 exploration licence applications, which covers an area of 1 093 km2.

In addition, Glengarry has reached agreement with Brazil’s Celulose Nipo-Brasileira to secure ownership of an extensive portfolio of iron-ore exploration tenements in the same region. 

This portfolio, comprising 63 prospective tenements, covers an area of 1 014 km2.

Edited by: Mariaan Webb

Source: Mining Weekly



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