Mining Update

The Klipspruit opencast mine (100% BHP Billiton owned) with a current run of mine (ROM) capacity of 4.8 million tonnes per annum (Mtpa) will be expanded to 8 Mtpa.

The Klipspruit Project, which involves an investment of approximately US $450 million, will include the development of a 16 Mtpa coal processing plant called the Phola Coal Processing Plant in a 50:50 joint venture with Anglo Coal. The plant, processing 8Mtpa of coal from each of the joint venture partners, will be located on the Klipspruit surface area and constructed by Anglo Coal.

The existing Rietspruit coal washing plant, located 32 kilometres from Klipspruit will be replaced by the new Phola Coal Processing Plant.

President BHP Billiton Coal, Dave Murray said: "The approval to expand our Klipspruit mine, which is a world class ore body, demonstrates our commitment to South Africa and the energy coal market. The new joint venture processing facility with Anglo Coal will be a value adding investment for both parties and will reduce the need to transport coal on public roads, thereby supporting our goal of Zero Harm".

Increased production is due to commence in the second half of calendar year 2009. Utilizing current reserves, the mine is expected to have a 20 year life, although this has the potential to be extended through the development of further resources. Approximately 4 Mtpa of coal will be exported through the Richards Bay Coal Terminal, using BHP Billiton's existing allocation.

In the year ended 30 June 2007, Klipspruit produced a total of 3.4 million tonnes of energy coal which was sold through both the export market and to Eskom, the South African power utility.

Indian Company Sainik to Exploit Ethiopian 160 MT Potash Deposit

One of India's leading coal mining companies, New Delhi based Sainik Coal Mining Pvt. Limited, has been granted a mining license by the Ethiopian government to exploit and further explore vast potash reserves in the Dallol Depression, in the arid Afar region near the Eritrean border.

Mineweb reports the license granted by Ethiopia's Minister of Mines and Energy Alemayehu Tegenu enables Sainik to mine the potash deposits, which were discovered by an American geologist 37 years ago in Musely and Crescent areas on a large scale. The deposit is estimated as containing 160 million tonnes.

According to Ethiopia's Reporter Newspaper the mining license grants Sainik an exclusive right for a large scale potash mining within the license area, 10 sq. km for twenty years. The company has also acquired exploration rights for potash and other saline minerals, such as magnesium and calcium.

According to Sainik Director Nitin Wagh, his company anticipates producing one million tonnes of potash per year by and a total of 20.85 million tonnes of potash in the next twenty years. The company plans to use solution mining/evaporation pond techniques to work the deposit. The agreement signed between the company and the Ethiopian government indicates that Sainik has set aside US $451.2 million for the project.

The agreement further says Sainik intends to process and market the refined product to the international market and to this endeavour, the company is already in talks with large potash consumers for long-term business agreements. Potash is used in the making of fertilizer.

Sainik has been in Ethiopia, especially in the western region hunting for coal reserves for years. The company says it has shelved its plans for coal mining because coal deposits in Ethiopia are not viable for large-scale production.

Before Sainik Coal Mining Company, a Norwegian company was also granted a license by the ministry of Mines and Energy to exploit the potash reserves in the Dallol Depression. However the project was called off following the Ethiopia - Eritrea conflict that reached a climax in 1998. The bloody conflict came to an end in 2000 but the Norwegian company had already made up its mind not to go ahead with the project prompting the Ethiopian government to revoke the license.

Sainik plans to start production in the next two to three years and will be presenting a Bankable Feasibility Study (BFS) to the Ethiopian government in nine months time.

Harmony Gold Gets $252M for Uranium Asset Stake

Harmony Gold said on recently it had sold a 60 percent stake of a new company it formed to house uranium assets for $252 million in cash to Africa's biggest private equity fund, Pamodzi Resources Fund, Reuters reports.

South Africa's Harmony said it had sold part of the uranium assets to take advantage of buoyant prices for the mineral used to make nuclear fuel, and would retain a 40 percent stake in the new company, which it said may be listed in the future.

Harmony, the world's fifth biggest gold producer, said proceeds from the sale would be used for capital expenditure and to pay debt.

Harmony, which wants to revive uranium production as a by-product of its core gold mining activity, valued the newly-formed company at $420 million.

The new firm will be owned by Harmony and ARMgold, a unit of African Rainbow Minerals (ARM) and a minority shareholder in Harmony.

The new company will house some of Harmony's uranium and gold assets of its Randfontein mine, known as the Cooke Section, located 35 km south-west of Johannesburg. Harmony said uranium processing at Cooke would be a viable, low-cost operation.

"The recent rise in uranium prices has made the uranium resources economical," Harmony said.

The company cited a sharp increase in the uranium spot price over the past four years from about $10 per pound to the current spot price of more than $90 per pound. The proposed transaction also gave a new lease of life to the uranium and gold assets at Cooke, Harmony said.

Graham Briggs, acting chief executive, had previously said Harmony was exploring three options -- selling to a third party, going into a partnership or processing the waste by itself.

Harmony's South African rivals, AngloGold Ashanti and Gold Fields are also seeking to cash in on a bull market for uranium, whose prices have soared in the last two years.

Pamodzi, which has $1.3 billion in funds available for investment, is a prominent black-owned investment group focused on the resource sector.

Pamodzi was launched in August, and is supported by a consortium of U.S. investors including affiliates of American Metals & Coal International, Inc. (AMCI) -- a leading international energy and resources sector investor.

ASIA

Chinese Silver Production, Consumption, Exports will Increase this Year

Silver Institute President Robert Quartermain says China will continue to be a growth market with silver production forecast to increase 17%, along with a 28.5% increase in jewelry consumption. A recent international silver conference in Chengdu, China's fifth largest city, revealed that Chinese silver production, consumption and exports are all expected to increase substantially this year.

In a presentation to the Sixth Annual China International Conference, Yao Wong, Vice Secretary-General Director of China General Chamber of Commerce, suggested that the healthy growth in the nation's economy should provide silver markets with an excellent opportunity for development.

Yao said that 2007 GDP growth is 11.5% for the first half of this year, while the current per capita GDP for China is US $2,000. Urban income is three times that of rural income.

During 2006, China reported a year-on-year total production of 8,252 tons of silver, a 14.7% increase over the same period of 2005. Silver consumption of jewelry and silverware accounted for 20% of total silver consumption in 2006, which was reported at 3,000 tons. Use of silver in jewelry and silverware increased 13.9% y-o-y in 2006. The country exported 4,712 tons of silver last year.

Silver Standard President and CEO Robert Quartermain, the President of the Washington, D.C.-based Silver Institute, which co-sponsored the Chinese conference, estimated that China's silver production will be 9,700 tons this year, for a projected 17% increase. Quartermain projected this year's Chinese silver consumption at 3,350 tons, including a 28.5% y-o-y increase in jewelry consumption.

Conference presenters noted that more than 3,000 manufacturers and fabricators of silver jewelry sell through 2,000 distribution enterprises, which make up the nation's silver industry.

Meanwhile, Quartermain said that "rapid ongoing development of microelectronics communications and information technology continues." An average growth rate of 15% between 2006 and 2010 is forecast by Chinese silver experts with silver consumption in electronics up 35%.

China has a long history of wearing silver jewelry. With the improving living standards of the Chinese people, Chinese silver experts anticipate that there will be an increased tendency to for personal consumption of silver jewelry.

The anticipated continuing rapid growth rate of silver consumption in China is expected to make the nation the second-largest silver consumer after the United States.

China's NDRC Backs International Coal Expansion by Domestic Producers

For the first time, China may become a net importer of coal next year, prompting government officials to endorse a new national coal policy encouraging international investment by Chinese coal companies.

China's National Development and Reform Commission (NDRC) said the Chinese Government is officially endorsing domestic coal companies investing in foreign resources.

The newly published national coal industry policy said that the nation will not approve new coal mine projects with a yearly production capacity that is less than 300,000 tons.

In coal mining provinces, such as Shanxi, Shaanxi and the Inner Mongolia Autonomous Region, new coal mines must have a production capacity of no less than 1.2 million tons annually.

The Chinese government believes that coal will continue to be the nation's main source of energy until 2020 in a country that hosts the world's third-largest coal reserves for 12.6% of the world's total coal reserves at the end of last year. China's coal production is expected to reach 2.6 billion tons this year for an 8% increase, according to Liang Dunshi, Vice Chairman of the China Coal Transport and Distribution Association.

The new policy encourages state-owned coal companies to invest in different regions and various industries. Mergers and acquisitions are encouraged. The world's largest producer and consumer of coal, China became a net importer of coal in January.

Guo Yuntao, Managing Director of the China Development Research Center of Coal Industry, said recently that China's coal output should increase to 2.55 billion tons this year from 2.38 billion tons in 2006. By 2010, China's output is expected to reach 3 billion tons. Guo said China is likely to become a net importer of coal in 2008.

Liang stressed that China's coal sector should also be more concerned about energy efficiency and environmental protection. China burns coal to generate over 70% of its electrical power, according to Guo.

Thus far, only Yanzhou Coal Mining (NYSE: YZC) has made an overseas investment in 2006 in the Austar mine in Queensland, Australia. The company, which mines more than 35 million tons annually, sells about 20% of its production outside of China.

The nation's largest coal producer and the world's second largest coal miner, China Shenhua Energy, is ranked 423rd on the Forbes "The 2007 Top 2000 Largest Public Companies."

Late last month, Shenhua announced it was negotiating with the Mongolian Government to purchase a coal mining project in Ömnögovi Aimag, located near the border with China. If Shenhua wins the coal project, the company said it may build a 500 kilometer rail link to transport the coal from Mongolia to China.

Shenhua hopes to extract more than 10 million tons of coke from the site. The proposed Mongolian acquisition would be Shenhua Energy's first mine outside of China.

Bloomberg reported that the company is in preliminary talks to invest in Indonesia and is studying another possible target in Australia. The company could raise $78.5 billion by selling new shares and diluting parent Shenhua Group's stake to just over 50%, according to Bloomberg.

Meanwhile, China Coal Energy, the nation's second largest producer, is believed to be launching a $4.3 billion Shanghai listing this month. The South China Post reported recently that China Coal is anticipated to meet its 2007 production target of 79 million tonnes.

Source: Mineweb

Chinese to Build Large Afghan Copper Project

Two Chinese organisations have won the rights to develop a potentially very large copper project south east of Kabul in Afghanistan.

China Metallurgical Group Corp (MCC) and Jiangxi Copper Co plan to invest some $3.7 billion to develop a large copper mine in Afghanistan. The two have won the right to develop the Aynak copper deposit near Kabul. MCC expects to produce 220,000 t/y of copper. Jiangxi Copper, China's largest integrated copper producer by output, will have the right to buy at least half of the copper produced, and will provide at least 20% of the capital cost to set up a joint venture with MCC to develop the mine.

The area around Aynak, 30 km south-southeast of Kabul in southeast Afghanistan, has been the focus of copper working since ancient times. Numerous old excavations and pits, as well as remains of smelting furnaces, have been discovered at Aynak and also nearby at Darband and Jawkhar. In 1974, Russian geologists prospected and mapped the Kabul area and rediscovered the Aynak, Darband and Jawkhar copper prospects. In 1974-1976 and again in 1978-1989, the Soviet Geological Mission conducted detailed exploration of Aynak, but this work ceased in 1989 with the withdrawal of Russian advisors, and the subsequent civil war halted any further work.

The British Geological Survey has reported that "Soviet-era exploration was very detailed and comprehensive in nature. It outlined a main orebody up to 210 m thick which was consistent down dip and along strike. A number of resource calculations were carried out but these do not easily conform to modern western classifications. Whilst a drill-indicated resource figure of 240 Mt at 2.3% Cu has been published, a number of small 'ore lenses' are included in this total, which may not be mineable in practice.

"The main orebody in the Central zone of the deposit, with its shallow dip down from near surface, is probably mineable from an open pit. The depth of overburden increases to the south and the stripping ratio may be too high to extend mining further south. The Western zone is steeply dipping and underground mining would be needed to exploit the main orebody."

Source: Mineweb

AUSTRALIA

Zinifex Makes Takeover Offer for Allegience Mining

Zinc producer Zinifex has made an all cash offer for all the shares in mineral explorer, Allegiance Mining. As per release Zinifex is offering 90 cents per Allegiance share or AUD 1.00 per Allegiance share if it acquires more than 30% or if the Allegiance board recommends the offer. If successful, the offer values Allegiance up to AUD 775 million.

The zinc producer said the offer represents a significant premium over Allegiance's last closing price.

In a slide presentation submitted to the Australian Stock Exchange, Zinifex said the potential takeover is an excellent fit with Zinifex's strategy, an attractive entry into nickel and adds near term production with scope for expansion.

Mr Andrew Michelmore CEO of Zinifex said that "For Zinifex shareholders, we like nickel as an attractive long term growth business and Allegiance's Avebury project is an excellent entry point for Zinifex.” With nickel production due to commence in early 2008, this mine would add immediate growth to Zinifex's existing profit centres, the Century and Rosebery mines.”

Mr Michelmore said that "Avebury is just the start of our strategy to vigorously grow in Zinifex's chosen base metals of copper, nickel and zinc. We like investing in high margin, long life, expandable mines, and Avebury delivers all of these attributes.”

The offer will be financed from Zinifex's current cash balance.

Rio To Extend Kestrel Coking Coal Mine Life

Rio Tinto has announced an extension of its Kestrel Mine in Queensland.

Rio Tinto said that the USD 991 million investments will address the growing demand in Asia for export coal. It is estimated the extension will increase production to an average 5.7 million tonnes of coal a year until 2031.

Mr Preston Chiaro CEO Energy of Rio said that "This represents a further 20 year commitment to the Bowen Basin and is a strong vote of confidence in the Asian coal market. The extension will enable us to tap into 112 million tonnes of high quality hard and semi hard coking coal and thermal coal for export."

The Kestrel Mine is located 51 kilometres north east of Emerald and produces 4 million tonnes of coking coal in a year for the export market.

Perilya Study May Lead to Re-opening Broken Hill Mine

Perilya Ltd (ASX: PEM) gave Broken Hill in far western New South Wales a new vote of confidence by announcing recently that it would proceed with a feasibility study on the North Mine Deeps.

Perilya, which took over the struggling and operations of Pasminco Ltd (resurrected as Zinifex Ltd) about six years ago, should complete the study by mid 2008, according to Mineweb, and if this is positive, then the deeps of this famous mine may be put into production by early 2009.

Perilya's main operating focus on Broken Hill's famous Line of Lode is the South Mine and limited mining in the North Mine's upper reaches have been the sole mining breadwinners for the Silver City - as Broken Hill is known - since the implosion of Pasminco.

Re-opening the deep workings of the North Mine, which were mothballed in 1993, would not only access a rich resource in the deeps but may lead to the development of the deeper Fitzpatrick Lode which had been started in the late 1980s to provide longevity for the field.

A pre-feasibility study showed that the North Mine Deeps had a mineral resource of 3.7 million tonnes grading 11.3% zinc, 13.5% lead and 219 grams/tonne silver. This resource extends to 1,800 meters and will be accessed by extension of the existing underground decline to level 12 (450m), while dewatering of the mine below level 22 (860m) will be carried out via the No 3 Shaft that extends to 1,580m.

Prior to closing in 1993 North Mine operated to 1,750m with ore hoisting through No 3 shaft. Perilya re-started mining via a decline from the bottom of the open pit with mining restricted to the inner boundaries of the two ore lenses. The company also has a multi million dollar exploration quest on licenses within a 10 kilometer radius of Broken Hill.

Perilya is probing for new leads on the Line of Lode and is developing a decline mine on the Potosi lease, north of the city. Another advancing mine development is on Central Mine Lease 7 which separates Perilya's operations, where CBH Resources Ltd is advancing the Rasp decline mine close to the workings where BHP began its life. That mine is tapping zinc-rich zones on this intensely mined area where the early miners bypassed the zinc as was then a nuisance in a quest to mine and recover the lead and silver.

NORTH AMERICA

POSCO to Invest $170 Mil. in US

POSCO said recently it will take part in a joint venture project with a U.S. mine in an effort to secure a stable supply of molybdenum, a key raw material for high-end steel products.

The world's fourth-biggest steel maker will invest $170 million in a 20 percent stake in General Moly's Mt. Hope project in Nevada. The project is expected to produce 15,000 tons of molybdenum annually beginning 2010, of which POSCO will take about 3,000 tons.

Company officials say POSCO's latest move will allow the company to purchase the essential raw materials at a lower price compared to other steel firms.

Molybdenum prices have been on the rise recently, squeezing steel makers to rush for stable supplies.

Among them is ArcelorMittal, the world's largest steel maker, which in November agreed to buy a 12.6 percent stake in General Moly to receive 6,500 tons of molybdenum annually for five years.

Steel Dynamics Completes Purchase of Minnesota Iron Mine

Steel Dynamics, Inc. (NASDAQ-GS:STLD) announced recently that it has completed a transaction in which it has purchased approximately 6,000 acres of land at Hoyt Lakes, Minnesota, from Cleveland Cliffs, Inc. Steel Dynamics also has obtained the mineral rights for this property as well as mineral rights on additional land that is contiguous to the purchased parcel. These properties are at the site of a taconite mine on the Mesabi Iron Range that was previously operated by the former LTV Corporation and was later purchased by Cleveland Cliffs.

Steel Dynamics plans to re-open the mine, to conduct surface mining of iron deposits, and to construct and operate a facility for the concentrating of iron ore. Operations could begin in late 2009 or early 2010, assuming the timely issuance of permits. In total, the cost of this venture is estimated to be $165 million. The company expects to hold approximately $65 million in equity and will be the sole owner of the mining and concentrating company, to be known as Mesabi Mining, LLC.

Separately, Steel Dynamics, Inc. and Kobe Steel, Ltd. have formed a new corporation, Mesabi Nugget Delaware, LLC, to construct and operate an iron nugget manufacturing plant on the site. Permits have been issued for the construction and operation of this iron-making facility and construction is now underway. As previously announced, Iron Range Resources and the Minnesota Department of Employment and Economic Development have supported this project, with the State of Minnesota agreeing to provide $26.5 million in non-recourse financing for the nugget project. The plant is expected to have an annual capacity of 500,000 metric tons and to begin iron nugget production in mid-2009.

Steel Dynamics anticipates that all of the iron mined from the site will be concentrated on site and delivered to the nugget plant or to future additional plants on the site. Substantially all of the output from the announced nugget plant is expected to be consumed in SDI’s mini-mills, primarily in Indiana. The company believes that this new business will be capable of providing to its steel mills, at a favorable cost, a domestic source of iron units that are of equal or higher quality than purchased pig iron. In time, additional nugget production facilities could be constructed at the site.

Cameco Positions US Operations for

Cameco Positions US Operations for Expansion

Cameco Corporation is implementing a new business name for the uranium mining operations of its wholly owned subsidiaries in Wyoming and Nebraska. Cameco's subsidiaries, Power Resources, Inc., and Crow Butte Resources, Inc., will conduct business under the name "Cameco Resources." The change is part of a long-term plan intended to better integrate the US facilities with other Cameco operations around the world and to create a stronger consolidated brand.

Cameco Resources will target overall production increases of 70% from its in situ recovery (ISR) operations at Crow Butte, Nebraska and Smith Ranch-Highland, Wyoming. These operations and related projects combined have over 50 million pounds of proven and probable reserves, with additional resources and exploration potential. The current combined production of Cameco Resources makes it the largest US uranium producer, with production of 2.1 million pounds in the first three quarters of 2007.

"Closer integration within Cameco will benefit our employees, strengthen our operations and provide a solid platform for continued growth," said Steve Collings, president of Cameco Resources. "We will need to double our workforce to achieve our goals and stronger identification with Cameco, the world's largest uranium producer, will help us attract and retain the people we need."

Tim Gitzel, senior vice-president and chief operating officer of Cameco, said the US ISR operations are a critical part of Cameco's strategy to increase and diversify uranium production.

"Our US operations are well-established, have good relationships with their communities and extensive experience with the regulatory system, which should ease the path toward increased production," Gitzel said.

Cameco is targeting to increase the combined production at its Crow Butte and Smith Ranch-Highland ISR operations to 4.6 million pounds U3O8 annually by 2011, accounting for a significant component of the company's 2011 annual production based on Cameco's previously announced forecast.

BHP Billiton Koala Underground Project In Production Ahead Of Schedule

BHP Billiton Koala Underground Project Ahead Of Schedule

BHP Billiton’s third underground diamond mine, the Koala Underground Project at Ekati in northern Canada, has been constructed safely, ahead of schedule and under budget.

First kimberlite production followed the inaugural blast which was successfully achieved on 4 October 2007, five weeks ahead of schedule and the main conveyor was commissioned on 9 December 2007, four months ahead of schedule. This marks the official start of underground ore production from Koala, with production ramp up to full production of 3,300 tonnes per day expected by mid calendar year 2009.

"The Koala underground mine is a very important part of the future of Ekati and completing the mine four months ahead of schedule and under budget and with an excellent safety record underlines the quality of the project team" said Graham Kerr, President Diamonds and Specialty Products.

Recently the Koala Underground Project received a High Commendation Award from BHP Billiton’s 2007 Project Safety Excellence Awards Program. BHP Billiton recognized the significant effort that has gone into improving the safety systems and processes on the Koala Underground Project and the excellent safety base to ensure future success and Zero Harm.

The Koala Underground Project, approved in June 2006, is expected to deliver approximately 9.8 million carats of high value Koala diamonds over an 11 year production life. The project’s capital cost is approximately US$220 million (BHP Billiton share US$176 million).

CENTRAL / SOUTH AMERICA

Mexican Mining '07 Production Estimated at $9.2b Despite Copper Output Losses

The potential loss of up to 100,000 tons of copper production due to the Cananea strike could cost Mexico’s mining sector up to $800 million in mining production this year.

Despite an estimated loss of 90,000 to 100,000 tons of copper production as a result of Grupo Mexico's Cananea strike, the Mexican Mining Industry Chamber, Camimex, Tuesday estimated that the value of Mexican mining production will increase to US$9.2 billion for 2007.

The chamber said that high global metals prices have strengthened the Mexican mining sector, estimating that total national mining production could have reached $10 billion this year without the Cananea copper strike.

The director of La Camara Minera de Mexico estimated that Cananea generates almost half of Mexico's total copper production. He estimated that the strike has created an economic loss of $650 million.

Camimex estimated that investment in the nation's mining industry totaled more than $1.6 billion this year. The chamber said it expects metals prices to remain high, which will continue to encourage investment in exploration and development of mineral deposits.

The strike at Mexico's largest copper mines began on July 30, shutting down three Grupo Mexico mining operations in the country.

Chile Expects to Be No 1 in New Copper Supply Over Next Ten Years

Chile Expects to Be No. One in New Copper Supply Over Next Ten Years

Chile's Government Copper Commission says that Chile will remain the world leader in copper output with 26 new copper developments coming on stream between 2006 and 2016, Reuters reports.

Chile will lead the development globally of new copper mines over coming years, keeping a hold on its pole position as the world's largest producer of the red metal, the Chilean government Copper Commission (Cochilco) said recently.

Cochilco Chief Analyst Aldo Picozzi said Chile will become host to 26 new copper developments from 2006-2015, adding 2.37 million tonnes of output, nearly 20 percent of the global production to come on line in that period.

Cochilco said 14 of the new mines will produce copper cathodes from SX/EW operations, and 12 will produce copper in concentrates.

Next after Chile in terms of new mines or brownfield development comes Peru, with 19 new projects due over the nine-year period. Canada will see 18 new projects, Australia 14 and the Democratic Republic of Congo 12.

Africa will remain the world leader in ore grades for copper, with percentages rising to near 1.84 percent, compared with 1.41 percent in 1980.

World ore grades will average at about 0.70 percent in the period, versus 0.87 percent in 1980 and Chilean ore grades are seen at 0.74 percent.

Chile, which produces about 35 percent of global copper, has seen its ore grades fall off since a mining boom in the 1990s, but Picozzi said the country is becoming a leader in the development of brownfield projects.

Brownfield projects refer to those where miners have come back to a deposit to either develop new mineral, or mine mineral that was considered too low-grade with technologies available 30 years ago.

Global miner Anglo American Plc said on Wednesday it will spend $1.74 billion to expand its Los Bronces mine in Chile, creating one of the world's biggest copper mines as it tries to nearly triple output over the coming decade.

Anglo American Base Metals President Brian Beamish said much of its future expansion would come in Chile, where most of its copper stakes are, but some would also come from Peru and potentially from Alaska and the Philippines.

Brazil's CSN to Invest $5.25B to Increase Iron Ore Mining, Steel Production

Brazil’s CSN has announced plans to invest billions in its steel making, iron ore mining, and cement generation projects in the State of Minas Gerais, which will generate 10,000 jobs.

Brazil's CSN, the nation's second largest steelmaker, made good on its pledge of last September to invest US$9 billion over the next four years, revealing plans to plow R$9.5 billion (US$5.25 billion) into mining, steel and cement projects in Minas Gerais state over the next six years.

Cia Siderurgica Nacional (CSN) President Benjamin Steinbruch Tuesday signed a protocol with the government of Minas Gerais, which includes expansion of the capacity of CSN's Casa de Pedra iron ore mine from 16Mt/y to 65Mt/y by 2011.

The company will also build a new 6 Mt/y pellet plant, a 4.5Mt/y steel mill, and two cement plants. In September CSN announced plans to construct a $2.9 billion, 4.5-million tonne steel slab plant near Casa de Pedra. All the iron ore CSN now uses comes from Casa de Pedra, with half mainly consumed in the domestic market.

Of the total capex investments, the lion's share will go to projects in the Congonhas municipality with Arcos City expected to get the cement plants while Belo Horizonte will become a steel beneficiation and distribution center for CSN.

The investments are anticipated to generate more than 10,000 jobs, according to a CSN news release. Steinbruch said the investment also reaffirms the company's value generation commitment to its shareholders, as well as generating wealth and jobs in Minas Gerais and Brazil.

The state-owned company was created in 1941, but went private in 1993 and 1994 after the Brazilian government sold an 81% interest in CSN. The company primarily operates as an integrated steel producer.

Earlier this year CSN launched an unsuccessful bid for the Anglo-Dutch steel producer Corus. However, India's Tata Steel successfully outbid CSN for Corus.

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