CVRD eyes copper in Brazil (October 26, 2001)

Vancouver — The world’s largest producer of iron ore has inked a US$42.5-million deal with Phelps Dodge (PD-N) to pick up the 50% stake it does not already own in the promising Sossego copper-gold property in the Carajas province of north-central Brazil.

The move comes with Phelps Dodge cutting back on copper production in the wake of low prices and Brazilian mining company Companhia Vale do Rio Doce SA (CVRD) setting its sights on developing copper as one of its core business areas, along side iron ore and logistics.

The two companies established a 50-50 joint venture agreement over the US$400-million project in 1998 with an eye on producing about 140,000 tonnes of coppper concentrates and 3 tonnes of gold annually.

A feasibility study completed in May puts Sossego’s reserves at just more than 300 million tonnes grading 1.02% copper and 0.3 gram gold. The large open-pit mining project is slated to begin production in 2004 at a respectable cash cost of US$32 per lb. of copper concentrate.

The project will mark CVRD’s first copper production in the Brazilian province and will complement the company’s four other advanced copper projects in the region — 118, Cristalino, Alemao and Salobo — all of which are in various stages of development and slated to start production between late 2004 and 2007.