Brazilian conglomerate Votorantim is to make significant, although still undisclosed, investments in new mining projects in South America, employing some of the money it obtained from selling its stake in Brazilian steel- maker Usiminas to Italo-Argentinian group Techint.
“Mining projects are gaining greater intensity [sic] within the group,” Votorantim Industrial CEO Raul Calfat told the Brazilian newspaper Valor Econômico recently. (The Votorantim group is divided into three major businesses – Industrial, Finance and New Business; Industrial accounted for 73% of total group revenues during the first half of last year.)
The Usiminas deal brought Votorantim 2.4-billion reais (R$), or roughly $1.36- billion (about R10.8-billion), which will be used to strengthen the group’s capital base, make investments in the production of cement and the completion of projects delayed by the global recession of 2008/9, as well as in mining. The group is already active in mining, directly producing nickel and zinc in its home country and having a 10% shareholding in Brazilian bauxite miner Mineração Rio Norte (MRN). (Other major shareholders in MRN include Vale, with a 40% stake, BHP Billiton with 14.8%, Rio Tinto Alcan with 12%, as well as Alcoa, which holds 18.2% but split between three of its subsidiaries.)
“We are in a favourable position to advance our organic growth in new mining projects – in Brazil, Colombia and Peru – and to keep an eye out for potential attractive business opportuni- ties,” said Calfat. For example, the group wants to speed up the reactivation of a bauxite exploration project at Paragominas, in the north of Brazil. It will also stimulate exploration projects in Peru and Colombia, looking for copper, zinc and silver.
Votorantim’s main mining and metals operations in these two countries, and in Chile, fall under its subsidiary, the Milpo group, a Peruvian company which is 50.2%-owned by the Brazilian group. Milpo mines zinc, copper and lead, with gold and silver as by-products. However, Votorantim Industrial busi- ness unit Votorantim Metais (Metals) separately has exploration projects in Argentina, Bolivia, Canada and Mexico, as well as in Brazil, Colombia and Peru. Votorantim Metais’ interest is focused on bauxite, nickel and zinc and this unit operates the group’s mines in Brazil. In addition, another Votorantim Indus- trial business unit, Votorantim Siderurgia (Steel), holds 72.67% of Colombian steelmaker Paz del Río which, in turn, operates iron-ore, coal and chalk mines in its home country.
In total, the group plans to invest just over R$3-billion this year (about $1.7- billion, or R13.4-billion), of which R$1.3-billion will be to expand cement produc- tion, with the construction of four new plants which should all be commissioned next year. Growing Demand This is to meet’s Brazil’s growing demand for the product – cement consumption in the country is growing at 7% to 8% annually. Last year, Votorantim invested some R$1.4-billion in cement and commissioned six new plants.
For the period January to September last year Votorantim Industrial (not the whole group) achieved revenues of R$18.1-billion (around $10.3-billion, or R81-billion), with earnings before interest, taxes, depreciation and amortisation of R$4-billion (some $2.26-billion, or R18-billion).
Cement accounted for about 45% of these revenues and metals (aluminium, nickel and zinc) 37%, while the contri- butions of the division’s other units, cellulose and steel, were 12% and 7% respectively. The Votorantim group is owned by the Ermírio de Moraes family and was founded in 1918 in the town of Votorantim, in the state of São Paulo.