MMX Mineracao e Metalicos SA, the Brazilian mining company controlled by billionaire Eike Batista, will seek about $1.4 billion of state development bank loans for its Minas-Rio iron-ore project in Brazil.

The loans will help the company and partner Anglo American Plc, the world’s second-largest mining company, build the $2.35 billion Minas-Rio iron-ore project, Paulo Gouveia, MMX’s legal director, said today in an interview.

The loans from the bank, known by its Portuguese acronym, BNDES, will help finance the 80 percent of the project that will be provided by Brazilian companies, he said. Chinese steel demand has caused the price of iron ore to more than double in the last three years, prompting plans to build more than 100 million tons of new Brazilian output by 2011.

“Our project has been pre-approved by BNDES,” Gouveia said. “The project is on schedule, and we plan to deliver our first ore in the last quarter of 2009.”

BNDES’s press office declined to comment in response to questions about MMX’s loans or approvals.

MMX and Anglo American plan to produce 26.5 million tons from the project’s mine in Brazil’s central highland state of Minas Gerais. The ore will be shipped to Acu, a new port in Sao Joao da Barra, Brazil, about 270 kilometers (168 miles) northeast of Rio de Janeiro city, using a 525-kilometer slurry pipeline.

In April, Anglo American agreed to buy a 49 percent stake in the Minas-Rio project for $1.15 billion.

MMX already has signed an agreement to ship 6.8 million tons of ore a year from the mine to the Gulf Industrial Investment Corp., a Kuwait-based industrial investment company that is producing direct-reduction iron in the Persian Gulf region.

`Advanced’ Negotiations

Negotiations are “advanced” on a memorandum of understanding to sell the remainder of the mine’s 26.5 million ton initial capacity to Japanese trading companies Sojitz and Sumitomo, Gouveia said.

Sojitz and Sumitomo would sell the ore primarily to steelmakers in Asia, he said.

On June 20, the National Water Transport Agency, which oversees Brazilian ports and waterways, issued a permit to build and operate the port of Acu, which will be able to handle the so- called “very-large ore carrier” class of vessels. Work on the port and pipeline is expected to start in September.

The company also plans to develop the port as a center for steel and iron-ore pellet production. The 7,000-hectare (17,300- acre) site may become a location for importing coal and natural gas and the generating electricity, Gouveia said.

MMX’s logistics unit is talking with Petroleo Brasileiro SA to let the state-controlled oil company use the port to service its nearby Campos and Espirito Santos Basin oil operations, the source of more than 80 percent of Brazil’s oil, Gouveia said.

To contact the reporters on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net ; Laura Cassano in New York at lcassano@bloomberg.net

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