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Brazil’s CVRD Sells Firm, But Keeps It

Brazil’s Companhia Vale do Rio Doce (CVRD) announced that it has sold its stake in Pará Pigmentos S.A. (PPSA) for US$ 117.8 million to its subsidiary Caemi Mineração e Metalurgia S. A. (Caemi).

CVRD owned 85.6% of the voting capital and 82.0% of the total capital of PPSA.


The objective of this sale is the consolidation of CVRD´s kaolin business in Caemi, who is already a player in the global kaolin market through its subsidiary CADAM S.A. (CADAM).


Over the last 20 years, CADAM gathered a large experience in the operation and marketing of kaolin products.


CADAM had a controlling interest in PPSA until 1999 and has been responsible for marketing PPSA products in the European market since the beginning of PPSA operations, in 1996.


Each PPSA and CADAM produces different and complementary types of kaolin for paper coating.


Moreover, they are performing studies for the development of kaolin products for other uses, to create a more diversified portfolio.


There are several synergies to be explored between PPSA and CADAM, with present value estimated at US$ 26 million.


Such synergies arise mostly from operational and logistical gains, estimated at US$ 16.1 million, and from marketing of the fine and coarse product lines, evaluated at US$ 8.2 million.


In the first half of 2004, PPSA sold 198.7 thousand tons of kaolin, generating net revenues of US$ 30.9 million. The cash generation measured by EBITDA (earnings before interest, tax, depreciation and amortization), computed according to the general accepted accounting principles in the US (US GAAP), reached US$ 8.4 million in the same period, and net earnings amounted to US$ 2.8 million.


As of June 30, 2004, PPSA gross debt amounted to US$ 50.6 million, while the corresponding net debt was of US$ 45.9 million.


PPSA is currently expanding its production and sales, aiming at operating at its full capacity of 600,000 tons per year.


Recently, it signed a contract with International Paper, the world’s largest paper producer, for the supply of 100,000 tons of kaolin per year between 2005 and 2009.


This contract will allow PPSA to operate at a high level of capacity utilization from 2005 onwards.


CVRD says that the consolidation of the kaolin business results in value creation for both CVRD and Caemi shareholders, since it makes viable a more efficient operation by the third largest kaolin producer in the world, with a capacity of production of 1.3 million tons per year. Therefore, it would be fully consistent with the Company strategic planning and long term goals.


CVRD
http:///www.cvrd.com.br

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  • mozia azubuike peter

    KAOLIN
    Peter Azubuike Mozia
    165, Akowonjo Road
    Egbeda.
    Tell: 234-7035018182.

    Hello,

    I am an entrepreneur by profession an industrialist in the making and I hope to meet you.
    In my community thier is a substance called Kaolin in a very large land scape. The members of the community use it to paint their houses, sometimes they sell the Black color which is medicinal. After my University education I called for the attention of the king and chiefs of my town and discussed with them about the need to use this God given gift to better our lives. They then granted me the permition to look for whosoever can come and invest on the land. We have therefore agreed that we don’t need to tax any company coming to invest on the land until they satrt business fully. I have the sample of this product at my disposal which I will send to you upon the receipt of your email delcaring your interest.

    Since then I have been looking for an investor who can come down here and explore the raw material and invest on it. On the site there are seven colors which can also be sent as sample including pictures of the site location. The colors are black, white, gray, pink, red, yellow, purple. If you find it interesting you get back to me on peter_azu08@yahoo.com for more information.The king and community chiefs will be pleased to meet with your company.

    Thanks for your anticipated coperation

    Mozia Azubuike Peter.

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