COMMODITIES trader Glencore has bought an unspecified stake in unlisted Brazilian iron ore exporter Ferrous – its first equity stake in a producer of the steelmaking commodity.
The Swiss-based trader and miner has also agreed to buy 20m tonnes of iron ore from Ferrous over four years, in a deal that feeds Glencore’s ambitions in a sector that has long remained the preserve of major mining groups Vale, Rio Tinto and BHP Billiton.
Ferrous, which has twice failed to raise capital through share offerings, has long been seeking a partner to bankroll its ambitious expansion plans, and the miner said yesterday the Glencore agreement strengthened its financial position.
“The agreement guarantees a substantial part of the company’s production until 2016,” chief executive Jayme Nicolato said.
Ferrous, which produced 3.2m tonnes of iron ore in 2012, is targeting 5m tonnes this year and wants to raise output to 17m tonnes from 2016.
Glencore, like rival trader Vitol, has big ambitions for iron ore.