Zamin owns 50% of Bamin a joint venture with Kazakhstan Eurasian Natural Resources Corp that is developing a mine at Caetité in Bahia state in the Brazilian northeast.
The mine will start operations in September 2012 and produce up to 25 million tons a year of iron ore concentrate. Iron ore reserves in the area are estimated at 2.5 billion tons.
Pramod Agarwal CEO of Zamin said the company is also in the early stages of prospecting a 6 million ton per year iron ore project called Greystone to the south of the Caetité mine. He said that elsewhere in South America, Zamin is developing another iron ore project slap bang in the middle of neighboring Uruguay near the town of Valentines.
Mr Agarwal said “Although the ore quality is low grade, it is easier to process into concentrate”. He anticipated that he will be present Friday, alongside Brazilian President Luiz Inácio Lula da Silva, at the laying of a foundation stone marking the beginning of work on Brazil West-East Railroad, a critical link in developing the Caetité reserve.
The railroad will provide the key 535 kilometer line from Bamin planned port terminal to the mine. Earlier this week, Brazil Ministry of Transport said a tender prospectus for the US$ 3.3 billion 1,500 kilometer railroad would be issued by this weekend.
Mr Agarwal said construction of the port is expected to go ahead by August.
A Zamin spokesman said the railroad, being developed by Valec Engenharia an engineering company controlled by the Brazilian Ministry of Transport, has enough ring-fenced funding around BRL 1.7 billion to cover expenditure for at least the section of interest to Bamin.
While the Brazilian government will pay for the railroad infrastructure, Bamin will buy 15 to 20 locomotives and 1,000 wagons to carry the ore to its private deepwater terminal to be built near Ilhéus, Bahia.