There you go it can be done - even with magnetite. I note what the Brazilian Real has done against the USD of late. Obviously the sums stack up a bit better than the rocketing AUD and the combined BHP/Vale expertise is slightly better than the in house capability at ARH........
If you go to their website looks like an impressive operation.
BHP-Vale iron ore pellet project points to price rise Geoffrey Newman From: The Australian May 02, 2011 12:00AM
THE expansion of an iron ore pellet producer in Brazil part-owned by BHP Billiton could indicate corporates are expecting higher iron ore prices than the market anticipated, according to UBS analysts.
BHP and the world's biggest iron ore producer, Brazil's Vale, will spend $3.5 billion expanding the iron ore pellet plant they operate in a 50-50 joint venture.
Vale's board approved the expansion at producer Samarco Mineracao, Vale said on Friday.
Samarco will build a fourth pellet plant with annual capacity of 8.3 million tonnes, increasing its capacity to 30.5 million tonnes. A third expansion was completed in 2008.
"The project encompasses the construction of a fourth pellet plant with capacity of 8.3 million tonnes per year, increasing Samarco's iron ore pellets capacity to 30.5 million tonnes, the enlargement of the Ponta Ubu maritime terminal in the state of Espirito Santo, and of mining and processing capacity at the Germano mine, in the state of Minas Gerais, and a third line of the 396km iron ore pipeline linking the mine to the pellet plant," Vale said.
Analysts at investment bank UBS said in a note to clients that the project was not a big contributor to BHP's earnings and was "marginal as a stand-alone project" but it showed corporates were assuming higher ore prices than the market.
"Perhaps what this project does show is that corporates may be assuming higher long-run iron ore prices than what we have used in this analysis and what the market is using, especially given the significant rise -- greater than 100 per cent -- in the cost to build this project over just the last five years."
The pellet plant will be in Espirito Santo state in southeast Brazil. Samarco produces mainly for export.
ARH Price at posting:
31.5¢ Sentiment: Hold Disclosure: Held
