Anglo Sees Ternium Ore Supply Deal by June, Castellari Says

By Juan Pablo Spinetto - Apr 6, 2012
Source : Bloomberg
Anglo American Plc (AAL) expects to sign a contract with steelmaker Ternium SA (TX) by June to supply iron ore from Brazil as it readies the start of its biggest project.

Anglo will supply Ternium with about 25 percent of the 26.5 million metric tons of expected annual iron-ore output from the Minas-Rio project in southeastern Brazil for at least 10 years, Paulo Castellari, the head of Anglo’s iron-ore unit in the Latin American country, said in an interview .

“We worked hard for almost six months with other clients to make space to guarantee volumes to Ternium,” Castellari, 41, said at company’s offices in Rio’s Barra da Tijuca neighborhood. “Everybody wants iron ore long-term contracts.”

Anglo is racing against companies including billionaire Eike Batista’s MMX Mineracao (MMXM3) & Metalicos SA and Ferrous Resources Ltd. in enlarging iron-ore projects in Brazil, the world’s second-largest exporter of the steel-making ingredient.

About 50 percent of the mine’s production will be sold to clients in the Middle East and the remaining 25 percent to Asian customers, Castellari said.

Miners are contending with cost pressures, labor shortages and environmental permit delays in Brazil. Rio de Janeiro-based Vale SA (VALE) said Nov. 28 an $8.04 billion expansion at its Carajas Serra Sul mine is two years behind schedule. Anglo expects its first shipments from Minas Rio in the second half of 2013 after suffering cost overruns and delays since it bought the project in 2008.

Castellari, who has been with Anglo for 18 years, replaced Stephan Weber in January as head of the iron-ore business in the Latin American country. A Brazilian national, he holds a degree in administration from Brazil’s Getulio Vargas Foundation and an MBA from the London Business School.