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Noble Group, the global supply chain manager of agricultural, industrial and energy products has acquired a 30% stake in Brazilian iron ore mining company Mhag Servicos E Mineracao (Mhag). It secured its stake via a US$60mn private placement.


The firm is considered a leading producer of iron ore for export in the Brazilian market, with estimated reserves of 3.8bn tons in five areas in the states of Rio Grande do Norte and Paraiba. As a result of Noble’s acquisition, it is hoping to significantly increase its exports through the port of Suape in the Pernambuco state.


Using the proceeds from the private placement, Mhag will be able to finance the first phase of a two-phase project to increase its production of iron ore. The first phase aims to expand Mhag’s iron ore operations in northern Brazil to 3.6mn tons per year of pellet feed by 2009. During the second phase, production should hit 10mn tons per year.


To achieve these goals, Mhag will be investing in a 5mn tons per year pellet farm, a slurry pipeline of approximately 130km, and a port in the state of Rio Grande do Norte
Mhag has a number of strategic benefits, set to be enhanced by the Noble acquisition. It is believed to be the closest iron ore mine to the Brazilian coast and a key strategic port.
This acquisition also highlights Noble Group’s strategy of securing control of all elements of the supply chain, even purchasing the physical assets needed to supply commodities to its clients.


“We continue to focus on controlling the entire supply chain, moving essential raw materials from low cost producers to high growth demand markets while connecting suppliers with consumers through a vertically integrated strategy,” explains Harry Banga, vice-chairman of Noble Group.