Brazil iron ore reserves keep multiplying

RIO DE JANEIRO, Sept. 2 (UPI) -- Brazil further boosted its iron ore reserves with the announcement of a major new discovery of iron and phosphate deposits in the southwest state of Mato Grosso.

The new mineral discoveries place Brazil further in the forefront as a major exporter of iron ore and manufacturer of steel -- a key goal of President Luiz Inacio Lulza da Silva's economic regeneration program.

Lula has defined as one of his goals a speedy revival of Brazil's defense manufacturing capacity and other heavy industries where iron ore and phosphates play a key part.

State Gov. Silval Barbosa said the discovery in Mato Grosso consisted of potential recoverable deposits of an estimated 11.5 billion tons of iron ore of 41 percent grade plus about 430 million tons of phosphates.

He said those estimates of the deposits make the new discoveries larger than the Carajas iron ore mine in the northern Para state. Iron ore deposits in the Para mine have been variously estimated at 3 billion-7 billion tons -- the higher estimate cited by the controlling company, Vale. The more conservative estimate was recorded by the national mining department before it was revised by Vale, a diversified mining multinational corporation quoted on the New York Stock Exchange.

Officials said although Carajas was dwarfed by the Mato Grosso discovery, its ore content was of a higher grade -- at least 67 percent. Estimates of the Mato Grosso deposits are based on scientific surveys of about 26 square miles of land near the border with Bolivia.

The state government named the concession holder as GME4 mining exploration company.

Analysts said that despite the upbeat messages from the government, the logistics of developing the Mato Grosso mine could be challenging, as the region is deep in the interior of Brazil and far from any ports.

Experts examining the mine's development prospects said a railroad network or a river barge system would be required to get processed ores and products into the international market.

The regional government has promised financial help with infrastructural development to facilitate the mine's optimum exploitation but analysts said early costs could run into hundreds of millions of dollars.

Brazil, which has amassed cash on the strength of commodity exports, could well afford to inject capital investment into the project, analysts said. Brazil has deployed vast resources into developing its deep-sea hydrocarbon deposits.

Iron ore development in Brazil already has potential major backers, including China.

China buys up to 24.6 million tons of Brazilian iron ore every month, most of it from Vale, the world's leading exporter of iron ore.

Iron ore trade is a lucrative trade for Brazil, which earned $12.35 billion from iron ore and concentrates exports in the first seven months of this year.