Ferrexpo to start talks on USD 5 billion partnership

June 15, 2008

June 15th (Steel Guru) – It is reported that Ukrainian iron ore miner Ferrexpo poised to enter the FTSE 100 index will start formal talks with several big mining groups and steelmakers about a USD 5 billion partnership to develop new mines.

Mr Mike Oppenheimer CEO of Ferrexpo said its company aimed to raise its iron pellet production over the next five years, from 9 million tonnes to 35 million tonnes a year. He said that “These plans are well advanced we are at the stage of formal engagement in discussions with interested parties.”

He said that the building of the Yeristovskoye mine would cost about USD 2 billion with the Belanovskoye mine costing USD 2.5 billion to USD 3 billion. He added that “It’s a big resource.”

Mr Oppenheimer said he was aiming to strike a deal with a partner before the end of the year.

Ferrexpo is due to start formal talks this week with companies including Rio Tinto and Anglo American, which are large miners of iron ore, and steelmakers including ArcelorMittal and Voestalpine, which are anxious to secure iron ore supplies at a time of strong demand. Ferrexpo has hired JPMorgan Cazenove to manage the process.

Ferrexpo already has basic designs for the mines and processing plants, but is keen to do a deal with a company that can help with the engineering and management, as well as the financing, of such a big project.

The Switzerland based company controlled by Mr Kostyantin Zhevago, the 33 year old Ukrainian billionaire businessman and politician owns the Poltava iron ore mine in central Ukraine and a plant that turns the ore into concentrated pellets. These pellets are sold to steel companies, especially those operating in central and Eastern Europe such as Voestalpine, ArcelorMittal and US Steel.

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