JFE Steel Corp. will participate in an iron ore development project in Minas Gerais, Brazil, to secure a stable supply source.
The project to develop the Fabrica Nova mine will be undertaken by Companhia Vale do Rio Doce of Brazil, the world's largest iron ore producer.
CVRD will produce iron ore at an annual rate of more than 10 million tons beginning in early 2005, while JFE Steel will provide necessary equipment and purchase 2 million tons a year over a period of 12 years, the Japanese steelmaker said Tuesday.
The Fabrica Nova mine has iron ore deposits totaling some 450 million tons, according to JFE Steel, which was created through a merger in September of NKK Corp. and Kawasaki Steel Corp.
The development project, which will require an initial investment of $47 million, is an extension of an iron ore development project under Minas da Serra Geral S/A that was established by CVRD jointly with Kawasaki Steel and six other Japanese companies.
For the new project, JFE Steel will make MSG an equally owned joint venture with CVRD by raising its stake to 50 percent from the current 24.5 percent.
JFE Steel decided to participate in the project to cope with a global supply shortage of iron ore caused by soaring demand in China.