September 8, 2008

Transportation Logistics

Canadian companies involved in Brazilian port project

Richard Gilbert

staff writer

A Vancouver-based junior mining company is entering into a strategic partnership with a major international steel producer to develop an iron ore port facility in Brazil.

Early this year, Adriana Resources Inc. purchased 771,818 square meters of land on the coast of Brazil for the development of a proposed iron ore port facility.

The company recently announced it has reached an agreement with ArcelorMittal, the world’s largest steel producer, to move forward with the construction of a port facility in the state of Rio de Janeiro.

“Three years ago, Adriana... identified the need for a new iron ore port facility in Brazil that would create an export opportunity to deliver iron ore to the end user”, said Michael Beley, president and CEO of Adriana.

“Today we have partnered with the leading steel corporation in the world to export iron ore from Brazil. ArcelorMittal brings the global expertise in mining, ports, seaborne shipping logistics and the ability to finance large infrastructure and mining projects through to operation.”

A Richmond-based company has been tapped to construct the facility.

Seabulk Systems Inc. is a design and build contractor that specializes in bulk transportation logistics.

Adriana’s goal is to construct an iron ore port facility that will initially operate at a transshipment capacity of 5 to 10 million tonnes per year and ramp up to a potential 50 million tonnes per year through the development of a deep sea terminal.

A significant number of independently owned iron ore mines, along with iron ore deposits have recently been purchased by major mining companies.

However, they have limited or no access to port facilities.

Adriana plans to buy iron ore assets in south east Brazil that are strategically located and able to access the port.

“The planned port facility at Sepetiba Bay in Brazil is the ideal captive solution to deliver access to the export market for ore from the Iron Quadrangle region,” said Aditya Mittal, CFO and member of ArcelorMittal’s Group Management Board.

Given the capital-intensive nature of the project, Adriana expects that the agreement will establish the required funding, technical and regional expertise to complete the project.

The company agreed to buy up to 20 per cent of Adriana’s common shares, which could cost up to $25 million.

It will also buy 80 per of the port for about US$40.5 million, with Adriana holding the remaining 20 per cent.

Each will fund their portion of the port development costs estimated at about US$250 million.

The parties will share in the capacity of the port, in proportion to their ownership. Adriana expects to have a minimum of two million tonnes iron ore throughput with the planned development of the port to 10 million tonnes per annum.

With about 320,000 employees in more than 60 countries, ArcelorMittal is involved in all major global steel markets, including automotive, construction, household appliances and packaging.

The company has sizeable supplies of raw materials and a global distribution network.

In 2007 the company had revenues of US$105.2 billion and crude steel production of 116 million tonnes, representing about 10 per cent of world steel output.

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