(ChinaCoalResource, Sept 29, 2006) Brazilian mining giant Companhia Vale do Rio Doce (RIO), or CVRD, said Thursday that it has signed an agreement to build an iron pellet plant in China as part of a joint-venture project.

CVRD's Mineracoes Brasileiras Reunidas SA unit will hold a 25% stake in the pellet plant being built in the China's province of Guandong. Zhuhai Yueyufeng Iron and Steel Co Ltd. will hold a 40% stake, while Pioneer Iron & Steel Group Co. Ltd. will hold a 35% share.

CVRD will invest $4 million to build the pellet plant, which will have nominal installed production capacity of 1.2 million metric tons per year. In addition, CVRD has a 30-year contract to provide 70% of the iron ore fines used at the plant to produce iron pellets, which are prized for their efficient use in blast furnaces.

The plant is expected to start operations in 2008.

"The pellet feed produced by CVRD and its subsidiary MBR has extremely good fit with local iron ore produced in China," CVRD said in a statement. "The several pelletizing plants being built in China to support their extraordinary growth in steel production are bringing additional source of demand for CVRD's iron ore."

The pellet plant joint venture follows several other CVRD efforts to gain a foothold in the Chinese market.

In January, CVRD received its first shipment of coal from a joint-venture operation in China. The shipment of 40,000 metric tons of anthracite coal arrived at the Praia Mole port in Brazil's Espirito Santo state from China's Henan Longyu Energy Resources Co. Ltd.

CVRD acquired a 25% stake in the company in June 2005 for $86.4 million.

Henan Longyu is a joint venture between CVRD and Chinese companies Yongcheng Coal & Energy and steel giant Baosteel International. The company operates two mines in China's Henan province, with annual output of 4.5 million metric tons of anthracite coal.

CVRD also is involved in a coke joint venture operation in China called Shandong Yankuang International Coking. The company is a joint venture between CVRD and China's Yankuang Group and Itochu Corporation. The coke plant which was completed in July, produces 2 million tons of coke and 200,000 metric tons of methanol per year.
source:ChinaCoalResource