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From the australian news:

CVRD eyes our mining assets
Blair Speedy
Resources
June 12, 2006
BRAZILIAN iron ore giant CVRD is considering buying mining assets in Australia to help feed growing demand for metals in Asia.
Jose Carlos Martins, CVRD's executive director of ferrous metals, said the company generally targeted growth via greenfield developments but would "definitely" consider acquisition opportunities which arose in Australia.

"If the opportunities appear, why not?" he said during an interview on ABC Television's Inside Business program.

"Australia is a mining country. It's a very good environment for business. It's a low-risk country, a lot of opportunities ... We opened up our office here last year for coal exploration mainly, but we intend it to grow for other businesses."

Mr Martins is in Australia to assess progress on CVRD's Belvedere hard coking coal exploration project in Queensland.

The company has identified coking coal as a new growth business, particularly with emerging steel giant India having its own iron ore reserves but lacking hard coking coal.

However, Mr Martins said the huge demand for metals had made acquisitions an expensive proposition and CVRD could instead choose to develop new mines from scratch.

"To buy assets is very expensive. Greenfield takes time, but it's solid. You pay a reasonable price for it and you build it brick by brick but if the opportunity (for acquisition) appears, we will consider it," he said.

Nomura equities strategist Eric Betts said there were plenty of opportunities for a company like CVRD to join iron ore rivals BHP and Rio Tinto in the Australian mining sector.

"Australia is very rich in resources, so there is certainly a lot of potential (for CVRD) to expand by either acquisition (or greenfield projects)," he said.

"A big company like that could definitely do something. One hurdle is prices have gotten quite high here."

A record $34 billion worth of minerals and energy projects were being developed as companies boosted output to meet soaring demand led by China, the Australian Bureau of Agricultural and Resource Economics said last month.

CVRD, BHP and other big mining companies are holding $US32 billion ($43 billion) in cash for possible takeovers as rising iron ore prices have allowed them to lower debt and return money to shareholders, according a report by accountant PwC earlier this month.

The Brazilian miner last year spent $US4.2 billion on capital projects to increase iron ore production, improve freight links and expand into nickel, copper and coal.

Meanwhile, the company has yet to reach agreement with Chinese steel companies over a 19 per cent rise in iron ore prices already agreed between the ore companies and steel makers in Japan, Europe and Korea despite a 71.5 per cent increase last year.

Mr Martins said China, which has tripled its iron ore imports in the past five years to become the world's largest steel-making country, was "in a process of learning" and was not yet big enough to be able to dictate prices. "Iron ore is a global market -- it's not only China. So they have to adapt their perception not only to the Chinese market but to the whole market," he said.

Chinese steel makers accounted for about 40 per cent of the global trade in iron ore last year, and Mr Martins said this could grow to 51 per cent by 2010, giving China the upper hand in price negotiations.

"I think they deserve it by the size they have. Their perception has to be more related to the world market," he said. It was too early to say if iron ore prices would increase again next year.

With Bloomberg