SAM expecting green light for $2.1bn iron ore project in Minas Gerais
Mining company Sul Americana de Metais (SAM), controlled by Hong Kong-based investment company Honbridge Holdings, has two challenges ahead. First, to execute and put into operation by the end of 2025 a robust iron ore project in northern Minas Gerais. Second, to extract and ship ore to processing facilities using remote control and 5G broadband technology to drive trucks and machines.
Jin Yongshi, a mining engineer who arrived in Belo Horizonte just over six years ago, is leading the $2.1 billion project. Honbridge acquired a stake in SAM from Votorantim group in 2010. Six years later, it owns 100% of the mining company's capital.
The mining complex and iron reserves - located in the municipalities of Grão Mongol and Padre Carvalho - are supplemented by the construction of a water dam for ore processing. The dam will be partly located in Padre Carvalho and partly in Fruta de Leite. A 67-kilometer power transmission line starting in Josenópolis supplies the industrial facilities.
Grão Mongol, with a population of 16,000, is 390 kilometers away from Belo Horizonte in a straight line and 572 kilometers by road.
The most appropriate logistics for exporting ore is building a 480-kilometer slurry pipeline ending in a port terminal in Ilhéus, Bahia since there is no railway in the region. This model is already used in Brazil by Samarco and Anglo American. SAM considered outsourcing was the best option: it signed an agreement with Lótus do Brasil to assemble and operate the pipeline as well as the filtering station at the port, increasing the investment by $1.1 billion.
With projected capacity to make 27.5 million tonnes a year, the project targets the foreign market. China buys almost 1.1 billion tonnes of iron ore a year for its steel mills, making it the company's biggest customer.
"We are in the phase of obtaining environmental licenses, making all studies [environmental impact assessment/report] requested for the project," SAM CEO Jin Yongshi told Valor. The company expects to get the preliminary environmental permit from Minas Gerais's environmental agency Semad by the end of 2021. Construction and operating permits are expected by the end of 2022 and 2025, respectively. The pipeline permit must be granted by federal environmental agency Ibama, since it crosses two states.
So far, $74 million have been spent with geological surveying and engineering studies. The project is expected to generate 6,200 jobs while under construction and 1,100...
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