Mineracao Usiminas, the mining arm of Brazilian steelmaker Usiminas, hopes for "lucrative exports" of iron ore in the fourth quarter, after a third quarter without exports, the company said Wednesday.
"There will be an opportunity for profitable exports," Wilfred Bruijn, executive director, said during a conference call with investors.
That possibility is mainly due to the recent devaluation of Brazilian real compared to the US dollar, the company has said. The real has fallen from Real 2.26/$1 at the start of June to a range of Real 2.40/$1-Real 2.50/$1, according to Brazil's central bank.
Besides the drop in the real, Musa is working on to become competitive in a 62% Fe iron ore price scenario of $80/mt CFR North China, reducing costs up to 25%, Bruijn said.
Musa has started a project to cut iron ore extraction expenses by $5-$10/mt, a 20%-25% reduction of current FOB mining costs.
"We have low control of freight cost and port price is already given, Bruijn said. "Mine cost is the only part of the logistic process where we have total domain," he added, affirming that it has already started. Musa should see some effect of it in October and more in November, he said. "Reduction will occur gradually."
Musa didn't mention its currently iron ore FOB mining cost.
Moreover, Usiminas expects the start-up of the Sudeste port, in Rio de Janeiro, by the end of the year. It has a take-or-pay agreement of $12.63/mt with port controllers.
While Musa tries to reduce in-operation iron ore projects, it is uncertain whether will proceed to the second stage of its iron ore production expansion, known as "Compact."
Musa finished a Real 800 million expansion, known as the "Friable" project, in 2013. The project allowed Usiminas to increase its iron ore production capacity to 12 million mt/yr from 8 million mt/yr.
"Musa is focused in deepening Compact studies," Bruijn said. "It just received the result of conceptual engineering, which predicted an elevated cost of capex and a further opex higher than expected."
The company then started a scooping study, trying to bring values to a more comfortable level, "to decide whether to go ahead or not," Bruijn said. "Musa will hold further studies to decide on the future feasibility of the project."
Soruce: Platts
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