Bahia Mineracao Seeks Brazil Banks for $1.4 Billion Mine Loan

September 08, 2010, 9:17 AM EDT

By Juan Pablo Spinetto

Sept. 8 (Bloomberg) -- Bahia Mineracao Ltda., the mining company controlled by Zamin Ferrous and Eurasian Natural Resources Corp., is seeking $1.4 billion of loans from Brazilian banks to finance an iron ore project in the country’s northeast.

Brazil’s state development bank will likely be the “lead” lender, Martin Kannengieser, a corporate director with Zamin, said in an interview at Zamin’s London offices. Regional banks such as Banco do Nordeste do Brasil SA will likely provide finance alongside the development bank, known as BNDES, he said.

“The view is that we can raise about $1.3 or $1.4 billion there and the rest we would have to borrow through equity,” Kannengieser said, adding talks with the banks are continuing.

Bahia Mineracao is investing $1.8 billion in the Pedra de Ferro project, Bahia state, to produce 19.5 million tons of iron ore concentrate by 2013. Latin American mining companies and steelmakers may invest a combined $100 billion during the next five to 10 years to supply growing steel and fertilizer demand, Bank of America Corp. said in a report last week.

“There is a lot of financing just available in the country,” Kannengieser said. “We very likely don’t need to go anywhere but Brazil.”

Zamin may be valued at $2 billion to $2.5 billion, the Financial Times reported July 24, citing an unidentified banker familiar with the company. That’s an “external” valuation that Kannengieser said he considers “reasonable.”

ENRC bought 50 percent of Bahia Mineracao for $300 million in 2008.

--Editors: Dale Crofts, Amanda Jordan
To contact the reporter on this story: Juan Pablo Spinetto in London at jspinetto@bloomberg.net
To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net