In the fiscal quarter ending on March 31, Japan-based Sumitomo will recognize a 65bn-yen (US$544mn) impairment loss at its Musa iron ore JV in Brazil mainly due to the drop in iron ore prices, a revision of the life of mine plan and the project's future expansion plan.
Musa (Mineração Usiminas) is a 70:30 JV between Brazilian steelmaker Usiminas and Sumitomo. The company has four iron ore deposits in the Serra Azul region in Minas Gerais state, with reserves of 2.6Bt and an expected mine life until 2045.
"Sumitomo determined that it will be difficult to recover the full investment amount in Musa, and therefore, will recognize the impairment loss to the recoverable amount," it said in a release.
Sumitomo will continue to make every effort to improve the operation and enhance the value of Musa with its partner, Usiminas."
Musa's write-down is not the only headache for Sumitomo in Brazil. The company is facing a spat with Luxembourg-based conglomerate Ternium, one of Usiminas' largest shareholders, being Nippon Steel & Sumitomo Metal Corp (NSSMC) the other.
Source: Business News Americas
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