JOHANNESBURG (miningweekly.com) – Diversified resources producer Eurasian Resources Group’s (ERG’s) wholly owned Brazilian subsidiary, Bahia Mineração (Bamin), has signed a memorandum of understanding (MoU) with the Brazil state of Bahia and a consortium of Chinese companies to develop a $2.4-billion integrated mining and logistics project, in Brazil.

The project includes Bamin’s Pedra de Ferro iron-ore mine, the Porto Sul deep-water port and the associated Fiol railway, which will link the landlocked state of Tocantins to the coast of Bahia.

The MoU further stipulates the state of Bahia’s intention to support the development of the project by enabling the use of Porto Sul for the handling of agricultural and other products, and by promoting tax benefits for Porto Sul and the Fiol railway.

The Chinese consortium, comprising infrastructure and machinery companies China Railway Group, China Communications Construction Company and Dalian Huarui Heavy Industry Group, intends to participate jointly with Bamin in the ownership and development of the integrated mine, rail and port project, and to arrange its financing.
 
Bahia state governor Rui Costa dos Santos described the project as “an important step for Bahia to grow, generate employment and bring development to the entire state”.

“I am delighted with the support that the project has received from the state of Bahia and proud of the benefits that it will bring to the local economy. This agreement is a major achievement for all parties. ERG is committed to ensuring the sustainable growth of all of the communities that it partners with,” noted ERG board chairperson Dr Alexander Machkevitch.

ERG CEO Benedikt Sobotka added: “I am very pleased [with] this important milestone at Bamin. We are partnering with some of the leading enterprises in China and continuing our partnership with the state of Bahia to advance one of the world’s most attractive iron-ore developments into construction, as well as establish an important building block for the Bi-Oceanic railway.”

The Pedra de Ferro mine will develop high-grade, large-scale iron-ore reserves near the city of Caetité, in Bahia, north-east Brazil. Once operational, the mine will produce up to 20-million tons a year of high-quality iron-ore products, including a significant quantity of direct shipping ore that does not require wet processing.

The quality and scale of Pedra de Ferro’s reserves, along with its access to efficient logistics infrastructure, will make the plant one of the lowest-cost producers of iron-ore in the world.
 
Porto Sul will be a deep-water port located north of the city of Ilhéus, Bahia. It will be capable of handling capesize vessels and will be the export point for Bamin’s iron-ore, as well as an important import and export centre for agricultural and other products.
 
The Fiol railway is a new broad-gauge railway system, which will become a major transportation corridor in Brazil’s north-east. The railway is being developed in stages, with the first 535 km of tracks extending inland from Porto Sul to a site near Caetité. Subsequent stages will extend further inland to reach Brazil’s agricultural heartland and connect with other railway systems. The Fiol railway is owned by the federal government of Brazil, which announced its intention to auction the railway as a concession to private parties.

The MoU signing took place on Monday during a bilateral meeting of Brazilian and Chinese businesses and government officials in the presence of the President of the People’s Republic of China Xi Jinping and the President of the Federative Republic of Brazil Michel Temer.