Ferrous to indefinitely postpone 400km iron ore pipeline in Minas Gerais state

Brazil-focused iron ore miner Ferrous Resources has decided to indefinitely postpone a 400km ore pipeline construction project in Minas Gerais state, local press reported. Now, Ferrous will continue to use compatriot rail operator MRS Logística's railroad to aid in the commodity output, which leads to the Sepetiba port in Rio de Janeiro state, according to reports. The pipeline was designed to have the capacity to transport 25Mt/y of iron ore from 2014, and was expected to cost 2.6bn reais (US$1.28bn), as previously reported. The company has spent about US$1.2bn in the last four years on the acquisition of 6 iron ore mines and in the resolution of bureaucratic issues. Now a presumed lack of capital and partners seems to be keeping Ferrous from developing the US$6bn megaproject, reports said. "Everything is difficult in Brazil, bureaucracy has too much control and the country is blocked," Ferrous CEO Jaime Nicolato said. In 2011 Ferrous exported 1.6Mt of iron ore, or 90% of the company's total production of 1.8Mt. Ferrous has five mineral assets in Minas Gerais' Iron Quadrangle and one in Bahia state, and is planning to become one of the biggest iron ore producers in the world. Ferrous is controlled by US, European, Australian and Brazilian pension funds and hedge funds. The largest shareholder is US hedge fund Harbinger Capital Partners with a 26% stake.